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El Dorado County Grand Jury final report
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FOREWARD
Just what is the Grand Jury, who are its members, and what are their functions? William J.
Shaw and Noah Weinstein in their article, Grand Jury Reports – A Safeguard of Democracy,
describe a Grand Jury as “ a short- lived, representative, non- political body of citizens
functioning without hope of personal aggrandizement. It [ the Grand Jury] comes from the
citizens at large and soon disappears into anonymity without individual recognition or
personal reward.” In El Dorado County this is a group of 19 citizens who have the ability,
time and willingness to serve the citizens of the County for a period of one year.
The requirements for service are basic and designed to allow and encourage maximum
participation by the County’s citizens. A juror must be 18 years old, a United States citizen,
and a resident of El Dorado County for at least one- year on the date they are sworn to
service. The candidate for juror must also possess natural faculties of ordinary intelligence,
sound judgment, and fair character.
Service on the Grand Jury is an act of citizenship. Individuals selected for the Grand Jury
should expect to work a minimum of three six- hour days per week throughout their year of
service. Remuneration for service was paid at the rate of $ 10.00 per day, however, effective
July 1, 2002 will be paid $ 15.00 for those days actually worked. Mileage driven for grand
jury business is currently reimbursed at the rate paid to all county employees.
The Grand Jury essentially serves as the agency of civilian oversight for our local
government. The common public perception of the Grand Jury is a body taking testimony
and handing down Criminal Indictments. In reality, the principal functions of the Grand Jury
are civil in nature. Some duties, such as the inspections of public prisons, are required by law
to be performed on a yearly basis. The majority of the Grand Jury’s inquiries, however, are
the result of its own internal direction. Generally, the Grand Jury audits local government
processes, expenditures, and the actions of its officials. Practically speaking, a grand jury
primarily responds to complaints brought to it by citizens of the County, to issues of concern
and public debate as publicized in the local media, and to other issues exposed during the
investigation of complaints.
During the course of its inquiries, members of the Grand Jury not only will find conditions
and practices within government that deserve recommendations for improvement, they also
will encounter examples of excellent service performed by units or persons in local
government. Grand Juries by their very design are intended to identify and recommend
improvement of deficiencies within government; as such, reports of the Grand Jury tend to be
viewed as negative in nature. It would be unfair, however, for the Report of the Grand Jury
to focus on the negative without recognizing outstanding performance within government. In
that light, this Report also contains commendations for those persons, encountered by
members of the Grand Jury, who were noted to have performed exemplary service for the
County.
i
At the conclusion of its investigations the Grand Jury may issue an indictment, an accusation,
and/ or a report. The year- end Report of the Grand Jury is a compilation of investigative
reports complete with recommendations for change that are intended to improve the
operations of government and so better serve the citizens of this County. Grand Juries have
no power to impose their recommendations on local government. Grand Juries cannot
enforce their recommendations; they merely have the ability to “ shine a light” on the facts
uncovered by their inquiries, thus bringing matters to the public’s attention. The Report then
provides a vehicle for public debate. It is a matter for the public to decide whether the
recommendations of the Grand Jury are appropriate, and whether actions taken by
government officials in response to those recommendations are themselves appropriate.
Ultimately, the citizens of the County carry out their role in this process, by expressing their
judgment on the issues at the ballot box.
Michael Day, Foreman
2001/ 2002 Grand Jury
To Obtain an Application
Any interested citizen who meets the required qualifications and is able to make the time
commitment may request an application for appointment to the Grand Jury from the Staff
Court Secretary at the following location:
Superior Courthouse
495 Main Street
Placerville, California 95667
( 530) 621- 6451
ii
TABLE OF CONTENTS
PAGE
FOREWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
EL DORADO COUNTY GRAND JURY
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
LETTER TO THE JUDGE FROM FOREMAN . . . . . . . . . . . . . . . vii
JUDGE’S LETTER TO THE GRAND JURY . . . . . . . . . . . . . . . . . . viii
EL DORADO COUNTY GRAND JURY
Supervising Judge & Staff Secretary Picture . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
2001/ 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Group Picture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
CITIZENS’ COMPLAINTS INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . xii
AUDIT & FINANCE
Confirming Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fixed Assets Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Independent Management Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exhibit – Harvey Rose Accountancy Audit
CRIMINAL JUSTICE COMMITTEE
Allegations of Violation of Ethics in Government Act . . . . . . . . . . . . . . . . . . . . 7
Citizen Complaint # 01/ 02- C- 025
Allegations Regarding the 2002 Sheriff’s Election . . . . . . . . . . . . . . . . . . . . . . . . 11
Citizen Complaints # 01/ 02- C- 027 and # 01/ 02- C- 035
El Dorado County Jail, Placerville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
El Dorado County Jail, South Lake Tahoe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
El Dorado County Juvenile Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Growlersberg Conservation Camp, Georgetown . . . . . . . . . . . . . . . . . . . . . . . . 28
iii
EDUCATION COMMITTEE
Golden Ridge School, Juvenile Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Central Sierra Regional Occupational Program . . . . . . . . . . . . . . . . . . . . . . . . . 34
Citizen Complaint # 01/ 02- C- 006
GOVERNMENT & ADMINISTRATION COMMITTEE
Introduction ( All Subcommittees)
Final Reports - Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Subcommittee on General Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Subcommittee on Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Subcommittee on Government Structure
Procedures for the Board of Supervisors in Responding to
Grand Jury Final Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Communication of Board of Supervisors’ Directives . . . . . . . . . . . . . . . . . . . . . . 89
Report Replying to Responses
Report Replying to Responses of Board of Supervisors to Dated
Final Reports of October 4, 2001, October 10, 2001, January 16, 2002
and January 23, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Exhibit – Response to Report Dated October 4, 2001
Exhibit – Response to Report Dated January 16, 2002
Exhibit – Response to Report Dated January 23, 2002
Exhibit – Report Dated October 10, 2001
MENTAL HEALTH COMMITTEE
Department of Mental Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
PUBLIC SCHOOL BUILDINGS & GROUNDS COMMITTEE
Inspection of Public Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
SOCIAL SERVICES COMMITTEE
Department of Social Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Independent Management Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Exhibit – Harvey Rose Accountancy Audit
iv
SPECIAL DISTRICTS COMMITTEE
Cameron Estates Community Services District . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Citizen Complaint # 01/ 02- C- 003
Golden West Community Services District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Citizen Complaints # 01/ 02- C- 020 and # 01/ 02- C- 024
APPENDIX A
Instructions to Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
v
EL DORADO COUNTY GRAND JURY
2001- 2002
RESOLUTION
WHEREAS, the EL DORADO COUNTY GRAND JURY has conducted
investigations and has arrived at certain findings and recommendations; and
WHEREAS, the EL DORADO COUNTY GRAND JURY desires to make its final
report thereon;
RESOLVED, by the EL DORADO COUNTY GRAND JURY that the attached report
be, and hereby is, adopted as the final report and conclusions of the EL DORADO COUNTY
GRAND JURY, 2001/ 2002.
PASSED AND ADOPTED at the meeting of the EL DORADO COUNTY GRAND
JURY this twelfth day of June, Two Thousand and Two.
MICHAEL DAY
Foreman
vi
EL DORADO COUNTY GRAND JURY
P. O. Box 472
Placerville, CA 95667
June 2002
Honorable Eddie T. Keller
Grand Jury Supervising Judge
Superior Court of El Dorado County
495 Main Street
Placerville, CA 95667
Dear Judge Keller:
I am pleased and honored to submit, to you, the Final Report of the 2001/ 2002 El Dorado
County Grand Jury. The nineteen members of this Grand Jury have worked long and hard
hours to compile this report. We, as panel members, spent considerable effort and energy in
the pursuit of satisfying and surpassing our legal and moral obligation.
The Grand Jury was comprised of volunteer citizens of our county who chose to donate a
substantial portion of this past year ( July 1, 2001- June 30, 2002) to the residents of El
Dorado County for the betterment of local government. It was a learning process for us all.
Our service was, at times, exhausting and fatiguing and at other times it tested our level of
patience. It was at all times, however, rewarding and exhilarating. Our various backgrounds,
expertise and personalities melded into a common bond, which allowed us to seek and
achieve our goals for the year.
This report reflects the major investigations undertaken by this Grand Jury. It does not,
however, consider the entire scope of work and effort put forth by this panel. Many hours
were devoted to investigation, research and testimony of other available remedies,
insufficient evidence, existing or pending litigation, etc.
As Foreman of the 2001/ 2002 Grand Jury, I am thankful and grateful to have served the
citizens of El Dorado County. I especially enjoyed the privilege of serving with eighteen
extremely dedicated and devoted members of this panel. They are now my friends!
Sincerely,
Michael Day, Foreman
2001/ 2002 El Dorado County Grand Jury
vii
THE SUPERIOR COURT
STATE OF CALIFORNIA
COUNTY OF El DORADO
495 MAIN STREET
PLACERVILLE, CA 95667
June 2002
Dear Grand Jury Members:
It has been my personal pleasure to have served as your Supervising Judge during the
2001/ 2002 term of the Grand Jury. I hope that my efforts on your behalf have been of service
to you.
All the judges in this county appreciate the dedication of good citizens like yourselves. You
have spent countless hours examining the operation of local government in order to make it
better. The investigations that you have conducted and the reports that you have issued cover
a wide range of topics, demonstrate keen insights, and offer helpful suggestions for
improvements. Your efforts reaffirm the vital democratic principles that government must be
open to public scrutiny and effectively serve the interests of its citizens.
I wish to express deep appreciation to Mr. Michael day, the Foreperson of this year’s Grand
Jury. I have had frequent contact with him during the year and enjoyed working with him. He
has outstanding leadership abilities and has worked tirelessly to accomplish the objectives of
the Grand Jury. Well done, Michael!
Sincerely,
EDDIE T. KELLER
Judge of the Superior Court
ETK: hw
viii
PICTURE
ix
EL DORADO COUNTY GRAND JURY
2001/ 2002
Honorable Eddie T. Keller, Supervising Judge
Bobbi Arkus
Hank Barbachano
Jane Marie Black
Steve Carlson, Sergeant- at- Arms
Michael Day, Foreman
Bob Doran
Jim Estelle
Dick Flachbart
Jane Fraim, Recording Secretary
JoAnn Hamiel
Tim Howell
Bob Isaacs
Patricia Kriz
DeLisa Nelson
Dick Nichols
Scott Nielsen, Pro Tempore
Barbara Palm
Mel Sheets
Norma Woodward
x
CITIZENS’
COMPLAINTS
ElDorado County Grand Jury
2001/ 2 001
Citizen’s Complaints
CASE NO. SUBJECT Disposition Comments DATE
01/ 02- 0- 001 Voter Registration Irregularities Bldg. Dept. No Action Finding 6/ 29/ 01
in Litigation
01/ 02- 0- 002 Sheriffs Dept. Criminal Justice Closed 7/ 18/ 01
( Deferred)
01/ 02- 0- 003 Cameron Park Estates Cam. Dist. Special Districts See Report 7/ 18/ 01
( Deferred)
01/ 02- 0- 004 DA’s Office/ Chili Bar Put- in Criminal Justice Closed 7/ 18/ 01
( Deferred)
01/ 02- 0- 005 General Services Gov/ Admin Closed 7/ 18/ 01
( Deferred)
01/ 02- 0- 006 El Dorado High School District Education See Report 7/ 18/ 01
( Deferred)
01/ 02- 0- 007 County Registrar- of Voters Gov/ Admin Closed 7/ 18/ 01
( Deferred)
01/ 02- 0- 008 Placerville Police Dept. Criminal Justice Closed 7/ 18/ 01
( Deferred) No Action Finding
01/ 02- 0- 009 El Dorado Hills Comm. Services Special Districts Closed 7/ 18/ 01
( Deferred) No Action Finding
01/ 02- 0- 010 El Dorado High School District Education No Action Finding: 7/ 18/ 01
( Deferred) Tennis Courts Allegations Resolved
01/ 02- C- Oil Sheriffs Dept. Dedicated Funds Audit & Finance Closed 7/ 18/ 01
( Deferred) No Action Finding
01/ 02- 0-
012 Logan Building Gov’t/ Admin Closed
7/ 18/ 01
( Deferred)
No Action Finding
01/ 02- 0- 013 $ 85,000/ Asst. Sheriff
Criminal
Justice
Closed
7/ 18/ 01
( Deferred) No Action Finding
xii
El Dorado County Grand Jury
2001/ 2001
Citizen’s Complaints
CASE NO. SUBJECT Disposition Comments DATE
01/ 02- C- 014 Out of State expenses, patrols, etc. Criminal Justice
Closed 7/ 18/ 01
No Action Finding
01/ 02- C-
015
Injured unloading truck Criminal
Justice
Closed 7/ 18/ 01
Insufficient evidence
01/ 02- C-
016
Disabled Student
Budget/ SELPA
Education Closed 7/ 25/ 01
No Action Finding
01/ 02- C-
017
Road/ Easement Problem Building - DOT Closed 7/ 25/ 01
No Action Finding
01/ 02- C- 018 Mental Health Care Deficiencies
Social Service See Report 8/ 9/ 01
01/ 02- C-
019
Unjust Termination/ DSS
Alleges State Law Violations
Alleges State Law Violations
Social Service See Report 8/ 29/ 01
01/ 02- C-
020
Special
Districts
See Report 9/ 19/ 01
01/ 02- C-
021
Special
Districts
Closed 9/ 19/ 01
No Action Taken
01/ 02- C-
022
Misconduct toward Social
Workers
Social Services Closed 9/ 26/ 01
Lack of Jurisdiction
01/ 02- C-
023
Misconduct of District Attorney Criminal
Justice
Just a Letter, No
Formal
10/ 24/ 0
1
Complaint
01/ 02- C-
024
Brown Act and other Violations Special Distrist See Report
11/ 6/ 01
01/ 02- C-
025
Bullet Proof Vests for Police
dogs in exchange for two
firearms Work Rules
Violations/ CPS
Criminal
Justice
See Report
11/ 28/ 0
1
01/ 02- C-
026
DSS See Report
12/ 5/ 01
01/ 02- C-
027
Campaign irregularities against
Under Sheriff Neves’ Sheriff
Run
Criminal
Justice
See Report
12/ 12/ 0
1
01/ 02- C-
028
Tahoe Keyes Property Owners
Association misappropriation
Special
Districts
Closed 1/ 16/ 02.
1/ 2/ 02
Not in our Jurisdiction
of funds
xiii
ElDorado County Grand Jury
2001/ 2001
Citizen’s Complaints
CASE NO. SUBJECT Disposition Comments DATE
01/ 02- C-
029 Irregularities in Building Dept. Building Comm Closed 3/ 17, 2002
1/ 9/ 02
Lighting Unlimited
Other remedies
Available
01/ 02- C-
030 Georgetown Public Utilites
District
Audit &
Finance
Deferred to Next
1/ 23/ 02
01/ 02- C-
031 Placerville Union School District Education Grand Jury 3/ 6/ 02
Closed 2/ 20/ 02
1/ 23/ 02
Other Remedies
01/ 02- C-
032
SLT/ Inequality of services to
mental Social Service See Report
1/ 29/ 02
health clients
01/ 02- C-
033
SLT/ Abuses of Ordinance 4476
by Building Comm Deferred to Next
1/ 29/ 02
local builders Grand Jury 3/ 6/ 02
01/ 02- C-
034 SLT/ lrregularities in DA’s office Criminal
Justice
Deferred to Next 1/ 29/ 02
Grand Jury 3/ 6/ 02
01/ 02- C-
035 Campaign Irregularities against Criminal
Justice
See Report 1/ 29/ 02
Sgt. Hennick’s Sheriff run
01/ 02- C-
036
County Counsel/ Public
Records Act Audit &
Finance
Deferred to Next
2/ 13/ 02
Grand Jury 3/ 6/ 02
01/ 02- C-
037 Fitness for work/ HRD G& A,
Personnel
Deferred to Next
2/ 27/ 02
Subcommittee Grand Jury 3/ 6/ 02
Closed 3/ 6/ 02
01/ 02- C-
038 Sheriffs Office/ Firearms Seizure Criminal 2/ 27/ 02
Justice
Other Remedies
01/ 02- C-
039 Superior Court/ Family Law Criminal
Justice
Closed 3/ 13/ 02
3/ 13/ 02
Lack of Jurisdiction
01/ 02- C-
040
Process of Flu shots
Administration
Health/ Soc
Serv Deferred to
2002/ 2003
3/ 13/ 02
Health Department Grand Jury
01/ 02- C- 041 Tahoe Manor Health/ Soc Serv See Report 3/ 20/ 02
01/ 02- C- 042 Mental Health/ SLT Clinic Health/ Soc Serv See Report 3/ 20/ 02
xiv
El Dorado County Grand Jury
2001/ 2001
Citizen’s Complaints
CASE NO. SUBJECT Disposition Comments DATE
01/ 02- C- 043 Tahoe Manor Health/ Soc Serv See Report 3/ 20/ 02
01/ 02- C- 044 Tahoe Manor
Health/ Soc
Serv
No Jurisdiction
3/ 20/ 02
01/ 02- C- 045
Uncollected property taxes/ SLT G& A Deferred to
2002/ 2003
3/ 20/ 02
Grand Jury
01/ 02- C- 046 DSS Director Selection Process Health/ Soc Serv Deferred to 2002/ 2003 4/ 3/ 02
Hiring Practices Grand Jury
01/ 02- C-
047
Fairplay Cemetery Ownership G& A Deferred to
2002/ 2003
4/ 3/ 02
Grand Jury
01/ 02- C-
048
Barton Hospital Health/ SS See Report
2/ 6/ 02
01/ 02- C-
049
Tahoe Opportunity Project Health/ SS See Report
2/ 6/ 02
01/ 02- C-
050
Tahoe Manor Health/ SS See Report
2/ 6/ 02
01/ 02- C-
051
Mental Health/ SLT Health/ SS See Report
2/ 6/ 02
01/ 02- C-
052
Questionable Practices of
Placerville Audit &
Finance
Deferred to
2002/ 2003
4/ 17/ 02
Controller Grand Jury
xv
AUDIT AND FINANCE COMMITTEE
Confirming Purchase Orders
Reason for the Report
During the course of its other investigations, the Audit and Finance Committee of the
2001/ 2002 Grand Jury heard several comments concerning the purchasing practices
throughout the County, such as lack of pre- approval and circumvention of existing County
purchasing contracts. Based on these comments, the Audit and Finance Committee
investigated established policy ( Purchasing Ordinance) and actual purchasing practices
within the County.
Scope of the Investigation
The following documents were reviewed:
• County Ordinance Code pertaining to Purchasing Procedures;
• General Services Department documentation;
• County final budgets for the Fiscal Year 2001/ 2002; and
• Past Grand Jury reports.
The following persons were interviewed:
• Interim Chief Administration Officer;
• County Auditor/ Controller;
• Interim Director of General Services; and
• Three employees from General Services.
Findings
F1: Chapter 3.12 of the El Dorado County Charter documents Purchasing Procedures and
is known as the County Purchasing Ordinance. This section of the County Charter
provides in part:
“ 3.12.020: The purpose of this chapter is to secure for the county
taxpayers the advantages and economies which will result from
centralized control over the purchase of supplies, materials,
equipment and contractual services resulting from the application
of modern, businesslike methods relative to government
expenditures for such purchases. Further, this chapter is to adopt
policies and procedures governing the purchase of supplies,
1
equipment and contractual services by the county in accordance
with the Government Code, section 54201 et seq.
3.12.060: The purchasing agent may, and where legally required
to do so, shall, authorize in writing any county department to
purchase renewable types of office supplies and materials in total
amounts of four hundred ninety- nine and 99/ 100 dollars ($ 499.99)
or less, utilizing the ‘ direct’ purchase order form, independently of
the county purchasing agent’s office; but such purchases shall be
made in conformity with the applicable procedures. The
purchasing agent may also rescind the authorization to purchase
independently, by written notice to the county department unless
otherwise prohibited by law.
3.12.070 A. Only department heads or their designated
representatives may approve and sign direct purchase orders in
total amounts of four hundred ninety- nine and 99/ 100 dollars
($ 499.99) or less. Department heads may delegate such authority
by filing a written authorization therefor with the purchasing agent
and the auditor- controller. … C. All departments shall strictly
adhere to written purchasing procedures as they may be issued or
amended from time to time by the purchasing agent or the board of
supervisors.”
F2: The General Services Department in conjunction with the Information Services
Department developed a tracking system to report the number and percentage of
confirming purchase orders. Confirming or “ after the fact” purchase orders are not
acceptable and are a violation of County Purchasing Ordinance requirements. The
data reflects purchase orders issued between $ 0 - $ 10,000.00. Data was not extracted
for purchases exceeding $ 10,000.00 since the competitive bidding threshold is
established at $ 10,000.00 by ordinance. The data does not include the issuance of
blanket purchase order purchasing activity, but rather independent purchase orders
that were requisitioned by departments as confirming.
Following are the results of this tracking system:
Reporting Period
Ending
Total Purchase Total Confirming Percentage
Fiscal Year 2000- 2001 $ 14,716 $ 10,955 74%
September 30, 2001 2,544 1,901 75%
December 31, 2001 4,043 2,997 74%
March 31, 2002 4,552 3,070 67%
F3: Purchase orders are sometimes “ split” in order to circumvent required signature
authority. For example, while a $ 15,000 purchase requires competitive bidding, two
$ 7,500 purchases would not. This is an unacceptable practice.
2
F4: There is no system in place to hold department heads accountable for failing to adhere
to County Purchasing Ordinance Requirements.
F5: Purchasing practices that do not adhere to the County Purchasing Ordinance subject
the County to risks of overspending and poor budget management.
Recommendations
R1: All department heads must be held accountable for adhering to the County Purchasing
Ordinance. Directors of departments ordering supplies and services without an
appropriate purchase order or contract in advance of those orders should be required
to appear before the Board of Supervisors, explain the reason( s) for such
noncompliance, and obtain express approval for the unauthorized acquisitions.
R2: Each department head should develop a system to hold subordinates exercising
purchasing authority accountable for noncompliance with the County Purchasing
Ordinance.
R3: The County Purchasing Ordinance should be amended to expressly prohibit the
“ splitting” of purchase orders.
Responses Required for Findings
F2 through F5 El Dorado County Board of Supervisors
Responses Required for Recommendations
R1 through R3 El Dorado County Board of Supervisors
3
AUDIT AND FINANCE COMMITTEE
Fixed Assets Report
Reason for the Report
The Grand Jury elected to inquire into whether the various departments of El Dorado County
government are maintaining accurate records and/ or inventory of equipment and fixed assets.
This inquiry did not address the issue of record keeping in regard to disposal of assets by the
County.
The inquiry occurred as a result of ( 1) observation of discarded items in an alleyway behind the
Government Center and ( 2) testimony taken by the Grand Jury.
Scope of the Investigation
• Interview with the County Auditor/ Controller;
• A review of the County’s Fixed Asset Inventory System - Property Inventory By
Department (“ Inventory Report”); and
• A random physical audit by the Grand Jury.
Findings
F1: On September 5, 2001, miscellaneous property was observed in an unsecured alley
behind County Administration Building B, adjacent to the Department of Veterans
Services. The items appeared to be surplus and/ or discarded equipment, including
computer and radio equipment, shelving, bins and old furniture. The items remained
in this area for several weeks.
F2: The existence and location of County assets is memorialized in the Inventory Report
and listed by department only. The format of the report is not designed to contain
information as to precise physical locations.
F3: Departments selected for the random audit were, at best, only able to locate inventory
assets noted in the Inventory Report by reference to individual memory or hand-written
notes on the Report.
F4: One audited department, with several locations, had particular problems locating
items of inventory listed on the Inventory Report, which were housed at outlying
department locations.
F5: The software program that produces the Inventory Report is not adequate to maintain
complete records of fixed assets and inventory. The software does not allow
4
departments to keep accurate records of items being surplused out of the departments
or relocated within the departments.
F6: Departments audited by the Grand Jury do not have independent computer systems
for tracking fixed assets or inventory within their individual departments.
Recommendations
R1: All equipment being surplused should be properly placed in a secured facility. Those
items should not be allowed to accumulate in unsecured areas.
R2: The Department of Information Services, in conjunction with the user departments,
should design and establish standardized procedures for the surplusing, locating, and
relocating or discarding of equipment.
R3: The existing Inventory Report program should be modified, or a new computer
program designed, to provide for systematic notations useful to individual
departments in maintaining accurate and up- to- date fixed assets and inventory
records.
Commendations
The Grand Jury commends county personnel for their creative means of maintaining records
as best they can with what they have available. The Grand Jury was impressed by the fact
that an employee in the Tax Collector’s Office, from memory, could take the investigating
members immediately to each item indicated on the Inventory Report.
Responses Required for Findings
F1 through F6 El Dorado County Board of Supervisors
Responses Required for Recommendations
R1 through R3 El Dorado County Board of Supervisors
5
AUDIT & FINANCE COMMITTEE
Independent Management Audit
During the course of its investigations, the 2001/ 2002 El Dorado County Grand Jury
concluded that there were several aspects of county government that deserved a more in-depth
investigation than the Grand Jury was equipped to undertake.
Accordingly, with financing approved by the Board of Supervisors ( Board), the Grand Jury
retained the Harvey M. Rose Accountancy Corporation ( HMRAC) to investigate and report
on issues as directed by the Grand Jury. One of these issues was a review of the County’s
budget process ( Budget Process).
The HMRAC report on the Budget Process is contained in its entirety within the Audit &
Finance Committee section of the 2001/ 2002 Grand Jury’s Final Report. The Grand Jury
carefully reviewed and considered both the factual findings and the recommendations
contained therein, unanimously concurs with those findings and recommendations, and
adopts them as its own.
Responses Required for All HMRAC Findings
El Dorado County Board of Supervisors
Responses Required for All HMRAC Recommendations
El Dorado County Board of Supervisors
Commendation
The Grand Jury commends the Board of Supervisors for its willingness to authorize and fund
the Grand Jury’s independent Budget Process audit. The Board’s willingness to engage in
and to permit such analysis and potential self- criticism evidences a high degree of civic
responsibility, to the benefit of the people of El Dorado County.
6
Analysis of El Dorado County's
Budget Process
Prepared for the
FY 2001- 02 Grand Jury
County of El Dorado
By the
Harvey M. Rose Accountancy Corporation
May 2002
Harvey M. Rose
Accountancy Corporation
1390 Market Street, Suite 1025, San Francisco, CA 94102 ( 415) 552- 9292 • FAX ( 415) 252- 0461
North Hollywood, CA
( 818) 503- 7191
Mr. Michael Day, Foreperson
Members of the FY 2001- 02 El Dorado County Grand Jury
P. O. Box 472
Placerville, CA 95662
May 10, 2002
Dear Foreperson Day and Members of the FY 2001- 02 El Dorado County Grand Jury:
The Harvey M. Rose Accountancy Corporation is pleased to submit this Analysis of El
Dorado County's Budget Process.
This report contains details of our review of the budget process, fourteen findings
identifying areas that could be improved in the process and eighteen recommendations
specifically identifying how these improvements should be achieved. The four areas of
findings and recommendations pertain to the need for a countywide strategic plan and
goals and objectives to guide the budget process, capital project management and
reporting in the budget and throughout the year, budget timing, information and analysis,
and internal service fund budgeting and reporting.
Thank you for choosing the Harvey M. Rose Accountancy Corporation to conduct this
analysis. We are available at any time to respond to any questions about this report.
www harvr? vrnsa nnm
Sincerely,
Frdd Brousseau
Project Manager
Table of Contents
Section
Page
Introduction ................................................................................................... i
1.
Long Range Strategic Planning and the Budget........................................... 1
2.
Capital Projects........................................................................................... 10
3.
Budget Timing, Information and Analysis................................................. 22
4.
Internal Service Funds ................................................................................ 29
Introduction
Purpose and Methods
The FY 2001- 02 El Dorado County Grand Jury retained the Harvey M. Rose
Accountancy Corporation to conduct a review of the County's budget process. The
objectives of the review were to review the process and its key milestones to determine:
•
if the finally adopted budget reflects policies, goals and objectives established by the
Board of Supervisors;
•
if the process of creating the budget is efficient and involves sufficient analysis to
identify the most cost- effective use of resources;
•
if the process establishes management accountability; and
•
if information provided to the Board of Supervisors at budget time and throughout the
year facilitates rational budgetary decision- making.
To accomplish this, the following methods were employed. Interviews were conducted
with key parties involved in the process including each member of the Board of
Supervisors, the Interim Chief Administrative Officer, the Auditor- Controller and
selected department heads and budget officers. Numerous budget- related documents were
reviewed including:
•
the County budget instructions for FY 2001- 02 and 2002- 03 prepared by the Chief
Administrative Office
•
the proposed FY 2001- 02 budget and workplan document
•
Budget Addenda documents for FY 2001- 02
•
the final budgets for FY 2001- 02, Mid- Year Budget Status Reports and presentation
materials presented to the Board of Supervisors for FY 2000- 01 and 2001- 02
•
the independently prepared financial statements for the County for FY 2000- 01 ( the
most recent year available while this project was underway)
•
various budget related documents including budget request forms and ad hoc reports
available from the county's financial information systems
• capital project monitoring documents used by the General Services and
Transportation departments
County procedures were compared to State law and regulations governing the budget
process and comparisons were made to practices in selected other counties. The review
was conducted between March and April 2002.
Overview of County budget
For FY 2001- 02 El Dorado County has budgeted $ 250,073,563 in revenues and uses. On
the expenditure side, this consists of $ 246,321,223 in specific budgeted costs for the
various County departments and $ 3,752,340 in appropriated contingencies. On the
revenue side, the $ 250 million is comprised of 11 sources such as property taxes, licenses
Harvey M. Rose Accountancy Corporation
Introduction
and permits, intergovernmental revenue and carryover funds from the previous year ( fund
balance). Exhibit 1.1 shows budgeted revenues of $ 220,669,990 for FY 2001- 02, by
source. The difference between the $ 220,669,990 shown and the total $ 250,073,563 in
budgeted revenues is $ 29,403,573 in fund balance carried forward from FY 2000- 01.
Exhibit 1.1
Budgeted Revenues for FY 2001- 02
El Dorado County
Source Amount
% Total
Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller
As shown in Exhibit 1.1, the State is the primary source of revenue for the County.
Following that are property and other taxes, charges for services ( development impact
fees, planning and building fees, mental health service fees, and others), and Federal
funds.
Exhibit 1.2 shows budgeted expenditures for FY 2001- 02, by function. As can be seen in
the table, public protection comprises the largest share of the County's budgeted
expenditures with general government and public ways and facilities second and third in
magnitude. The County's contingency appropriation of $ 3,752,340 is also shown. This
contingency amounts to 2.4 percent of total budgeted General Fund expenditures.
Harvey M. Rose Accountancy Corporation
Current Secured Property Taxes $ 32,054,017 14.5%
Current Unsecured Property Taxes 899,767 0.4%
Other Taxes 13,354,928 6.1%
Total Taxes 46,308,712 21.0%
Licenses and Permits 7,755,097 3.5%
Fines, Forfeitures and Penalties 2,423,749 1.1
Use of Money & Property 1,847,731 0.8%
Intergovernmental Revenue:
State 70,983,076 32.2%
Federal 28,777,865 13.0%
Other 500,559 0.2%
Charges for Services 42,833,880 19.4%
Miscellaneous Revenues 2,386,600 1.1%
Other Financing Sources 16,852,721 7.6%
Residual Equity Transfers -
Total $ 220,669,990 100.0%
Exhibit 1.2
Budgeted Expenditures for FY 2001- 02, by Function
El Dorado County
Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller
Another way of viewing the County's budget is by fund, as presented in Exhibit 1.3. The
table shows that most of the County budget is comprised of the General Fund and the
Roads- Transportation Fund ( 80.2 percent of the total budget). All funds except the
General Fund are restricted legally to certain purposes. The Board of Supervisors has
discretion over the uses of the General Fund only. The Board has authority over the
amounts appropriated for various uses such as salaries, professional services, supplies, etc
within the other funds, but only for the purpose for which the fund is legally designated.
General Fund monies on the other hand can be appropriated to any department or for any
purpose within the County structure.
Exhibit 1.3
Budgeted FY 2001- 02
Expenditures and Revenues
by Fund, El Dorado County
Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller
Introduction
Harvey M. Rose Accountancy Corporation
Function Amount % Total
General Government $ 60,467,389 24.2%
Public Protection 67,826,132 27.1%
Public Ways and Facilities 44,005,027 17.6%
Health and Sanitation 31,695,872 12.7%
Public Assistance 39,033,680 15.6%
Education 2,398,404 1.0%
Recreation & Cultural Services 894,719 0.4%
TOTAL $ 246,321,223 -
Contingency Appropriation $ 3,752,340 1.5%
TOTAL BUDGETED $ 250,073,563 100.0%
Fund
General
Amount
$ 157,249,680
% Total
62.9%
Roads- Transportation 41,367,152 16.5%
Health Department 19,719,350 7.9%
Mental Health Services 10,463,260 4.2%
Community Services 8,026,027 3.2%
Accumulated Capital Outlay 5,403,519 2.2%
Erosion Control 4,413,840 1.8%
County Road District Fund 2,617,875 1.0%
Tobacco Settlement 487,860 0.2%
Planning: EIR Development Fees 300,000 0.1%
Special Aviation 20,000 0.008%
Fish and Game 5,000 0.002%
TOTAL $ 250,073,563 100.0%
Introduction
It should be noted that a significant portion of the General Fund is actually used to match
State, federal and other external funding so the Board does not actually have full
discretion over all of General Fund monies.
As in all counties, much of the El Dorado County budget process is governed by State
law and regulations and follows a sequence of events for the most part repeated each
year.
The California Government Code contains a number of deadlines that govern the
County's budget process and timetable. Highlights of these requirements include the
following:
Estimates of revenues and expenditures are to be provided to the County's auditor or
administrative officer by June 10 of each year ( § 29040)
A tabulated version of the estimated revenues and expenditures, or a budget, is to be
provided to the Board of Supervisors by June 30 of each year ( § 29062)
The Board of Supervisors shall act on the budget by July 20 of each year ( § 29063)
Copies of the budget shall be prepared and made available to the public by August 10
of each year ( § 29065)
The Board of Supervisors shall notice the public on or before August 10 of each year
of public hearings on the proposed budget ( § 29066)
On or before August 20 of each year public budget hearings must commence.
( § 29080)
The budget must be adopted by the Board of Supervisors by August 30 of each year
( § 29088)
Unfortunately, these timing requirements do not coincide with the State budget cycle so
some budget decisions have to be prepared without benefit of the finally adopted State
budget.
El Dorado County has designed its budget process to enable it to meet these State
mandated deadlines. The County's process includes:
Some departments begin preparation of their revenue estimates and program plans
starting in the fall
Budget instructions prepared by the Chief Administrative Officer are provided to all
departments in February
Completed department budget requests are provided to the Chief Administrative
Officer by April
The Auditor- controller prepares estimates of non- departmental revenues in April and
May
Chief Administrative Office staff reviews the budget requests during April and May
The Chief Administrative Officer's proposed budget is transmitted to the Board of
Supervisors by June 15
The Board of Supervisors accepts the proposed budget in June
iv
Harvey M. Rose Accountancy Corporation
Budget addenda requests are prepared by departments and submitted to the Chief
Administrative Office in early August
Budget addenda reports and documents are submitted to the Board of Supervisors in
August
Budget addenda hearings take place in September
Acknowledgments
The County's budget documents and midyear reports are very extensive documents,
thoughtfully organized and containing much useful information. Preparation of these
documents certainly requires a great deal of work by County staff and the Chief
Administrator's Office. This process is made more difficult at present because the Interim
Chief Administrative Officer's prior position of Assistant Chief Administrative Officer is
vacant, temporarily reducing the number of staff positions available for budget analysis
and preparation. Preparation of the budget document must take place at the same time as
the Chief Administrative Office meets its other ongoing responsibilities.
The auditors wish to acknowledge the Interim Chief Administrative Officer who was
extremely helpful in the conduct of this review. He was generous with his time and
provided numerous budget related documents and reports for review and analysis.
Introduction
Harvey M. Rose Accountancy Corporation
1.
Long Range Strategic Planning and the Budget
F1.1
F1.2
F1.3
The County does not have a long range strategic plan with goals and objectives set
by the Board of Supervisors to guide the allocation of County funds and resources.
Without this, budget and program priorities are set primarily by County staff
without the benefit of structured input from elected officials and the public. This has
been particularly true in past years when the budget was adopted with very little
discussion at the Board of Supervisors public hearings.
For the current fiscal year, FY 2001- 02, the Board of Supervisors chose to hold
more extensive public hearings as part of the budget addenda process and received
detailed presentations from all departments. While these hearings allowed for more
interaction between the Board and the departments than has taken place in the
recent past, this process would be even more valuable if the budgets submitted by
the departments were prepared under policy direction already provided in a long
range strategic plan. Another benefit of a strategic plan is providing a common set
of goals and objectives for all County employees.
As part of a multi- year strategic planning effort, a process for measuring individual
department performance and plan outcomes is needed. This would also enhance the
budget process by providing the Board of Supervisors with meaningful performance
measures for each department and a method for measuring the effectiveness of
allocated funds.
Many organizations, public and private, engage in a strategic planning process to accomplish the
following: 1) confirm and refine the mission statement of the organization with which all
employees and stakeholders agree; 2) establish a vision for the future of the organization; 3)
develop goals, objectives and action plans to ensure accomplishment of the mission and vision;
and 4) establish a mechanism for measuring and reporting on actual organization performance
relative to the goals, objectives and action plans.
Generally, strategic plans are multi- year in nature with a five year horizon being fairly typical. A
strategic planning process for El Dorado County should include the following steps:
0
0
a
0
0
Assessing the current state of County operations including resources available and
strengths and weaknesses of the organization
Identifying likely future trends that will affect the County ( e. g., population growth in El
Dorado and neighboring counties, changes in State funding formulas, likely incorporation
of cities, impacts of new technology, etc.)
Identifying likely future service needs and resources available to meet those demands
( i. e., likely revenue streams)
Establishing service goals and objectives consistent with the mission and vision for the
future
Establishing a system for measuring the County's success in meeting the stated goals and
objectives
Harvey M. Rose Accountancy Corporation
Section 1: Long Range Strategic Planning and the Budget
Currently El Dorado County does not have a long term strategic plan. Some departments such as
the Information Services Department have developed plans specific to their departments and
programs but there is no overarching plan for the County as a whole. A countywide plan would
be valuable for budget purposes as it would help guide the allocation of resources consistent with
established goals and objectives.
Under the present system, department heads can set goals and objectives for their departments
and Board members may provide direction on a case by case basis through budget hearings or
other forums where department heads and Board members interact. But there is no formalized
process by which the public and the Board as a group reach consensus and establish priorities
that provide clear direction to all departments.
A multi- year approach helps get around the limitations of the single year budget process that
often doesn't address projects and initiatives that span more than one year. Typical multi- year
projects in the county include capital projects, service delivery improvements, improvements in
administrative activities, computer installations and upgrades, and other initiatives. While final
appropriations still have to be made in the annual budget to fund multi- year projects and
initiatives, providing directives in a strategic plan will help guide funding decisions in the budget
process and will provide direction to department managers about their priorities.
The County needs a system to measure department performance
Measuring accomplishment of the goals, objectives and action plans in a strategic plan is
probably one of the greatest benefits of embarking on such an effort and it is directly linked to
the budget process. First, it makes the strategic plan a much more meaningful, results- oriented
process. While establishing mission and vision statements, goals and objectives and action plans
are all worthwhile activities, they can become meaningless if there isn't a method of measuring
and reporting results. Setting an overall goal for the County such as making the County safe from
crime is fine, but adding a method for measuring whether or not this occurs gives the process
much greater impact. This could be measured in crime rate trends, arrest rates, successful
prosecution and sentencings, community perception of safety, and other measures. These type of
measures can be tied to the budget process through, for example, reviewing law enforcement
officers per capita, arrests resulting in successful prosecutions, response times, and other
measures. The budget can be adjusted accordingly to improve these measures to meet the service
goals of the strategic plan.
For each department, the proposed El Dorado County budget includes a mission statement,
workload indicators, written summaries of all major programs, and staffmg information. This is
useful information but what is missing are goals and objectives for the department and outcome
measures to provide meaning to the workload indicators. The workload indicators, shown for the
proposed, current and previous two fiscal years, generally measure caseload but not program
outcomes. For example, the Probation Department budget for FY 2001- 02 shows 33 workload
indicators for eleven program areas. The program areas include Juvenile Hall, Juvenile
placement, Group Homes/ Foster homes, Adult Court, Adult Supervision and others. Workload
indicators include measures such as number of court disposition reports, number of intake
hearings, average daily population at Juvenile Hall, number of Adult Court reports, number of
Harvey M. Rose Accountancy Corporation
Section 1: Long Range Strategic Planning and the Budget
adult probationers supervised, number of number of felony sentencing reports prepared and
others.
The problem with the workload indicators in the Probation Department's budget is that none of
them allow for an assessment of department outcomes. For example, a common objective for
probation departments is to rehabilitate the probationer so they don't commit the same crime
again and have subsequent encounters with the criminal justice system. To measure this
objective, recidivism rates should be presented in the budget document rather than just the
number of probationers supervised by the department. A high recidivism rate might indicate that
Probation Department efforts are not succeeding and would lead to discussion about the level of
funding for this effort and whether or not it is adequate and if the Department needs to operate its
programs differently to achieve greater success.
The Probation Department's number of court reports workload indicator also measures work but
not outcomes. It is not possible to tell from the numbers alone if the department is doing a good
job of producing its reports for court. Two of the most important factors for court reports
generally are whether they are delivered to the court timely and whether they contain the
information needed by the judiciary to facilitate decision- making. Useful performance measures
for this work might include number of reports delivered to the court on time and the results of a
survey of the court's satisfaction with the content of the reports. As with the previous example,
this type of information would enable a more informed discussion of the appropriateness of
funding levels and program management.
Having broad countywide goals and objectives in a strategic plan would also help guide
departments such as the Probation Department in that their goals, objectives and funding
allocations and requests would need to be linked to the countywide goals and objectives. For
example, countywide goals and objectives related to the Probation Department might be to
improve coordination between all of the County criminal justice agencies and expansion of
alternative programs to keep nonviolent offenders out of jail. The Probation Department would
need to respond to these goals and objectives by presenting its coordination efforts with other
departments, and development or expansion of alternatives to incarceration programs.
Another link between the strategic plan and the budget is that the strategic plan should include
financial goals and objectives for the County. These could include target reserve levels, target
user fee recovery rates, a countywide approach to one- time revenues, approaches to funding
levels for internal service funds, policies regarding deficit spending and others.
Departmental strategic planning in El Dorado County
As mentioned above, El Dorado County's Information Services Department produced a strategic
plan in 2000. The plan was prepared in response to a request from the Board of Supervisors and
it states that it will be regularly updated. The purposes of the plan are to: anticipate future
information processing needs and provide a strategy for meeting those goals; define an optimum
sequence of events to achieve the strategy; facilitate common understanding and support for the
department's future direction and goals by all key stakeholders ( customers, staff, County
management); provide a framework to manage and control the working environment; and,
Harvey M. RoseAccountancy Corporation
achieve optimum effectiveness and efficiency of resources. Its goals for the future include:
expanding basic intranet/ intemet services; sharing and integrating data; providing business
support data in multiple formats; providing multi- level integrated computing services; re-engineering
business processes; guaranteeing the integrity and availability of County data; and,
maintaining adequate and appropriate resources.
The Information Services plan and any other department strategic plan in the County should be
used as underpinnings to a countywide strategic plan. The countywide plan would provide higher
level goals and objectives and individual department plans would be more specific and detailed
regarding their particular services. The various individual department plans should be consistent
with the countywide plan prepared by the Board of Supervisors. As suggested for the countywide
strategic plan, individual department success in meeting the goals and objectives in their plans
should be measured on an annual basis.
Strategic planning in other jurisdictions
As mentioned above, many private and public organizations have prepared and are implementing
strategic plans. The public organizations include counties and cities throughout the country. In
California, one of the more extensive county strategic plans was prepared in Riverside County.
The plan, entitled Strategic Vision 2020, addresses the County's mission and business, vision for
the next twenty years and guiding principles, service delivery priorities, service goals and
strategies, inter- governmental relations, environmental issues, financial management
fundamentals, land use planning principles, and related matters. Since many departments in the
county have also prepared strategic plans, the Countywide plan incorporates all of those plans.
The Riverside plan addresses limits to County service and highlights what the County cannot do
as well as areas where it should excel.
Maricopa County, Arizona initiated a strategic planning process in 2000 that integrated planning,
budgeting and performance measures. For this effort, each department was required to prepare a
strategic plan that included the following:
a
0000
Section 1: Long Range Strategic Planning and the Budget
The County mission and vision statement
A department mission and vision statement'
Department goals
Identification of department issues
Identification of all key programs in each department including:
D Program name
D
Program purpose
Key results for the program ( usually a quantifiable measure)
Activities and services within each program
Outputs for each activity
Actual results for each activity compared to key result expectations
Cost per output
1 The department vision statement was optional in the Maricopa County plan.
Harvey M. Rose Accountancy Corporation
Section 1: Long Range Strategic Planning and the Budget
Quarterly reports are produced for each department in Maricopa County. A sample report for the
Maricopa County Information Systems department is shown as Attachment 1. As can be seen,
performance data is not available yet for each key activity in this program. But efforts are now
underway to regularly collect this data and to tie it to a cost efficiency factor shown at the end of
the attachment.
There is a range of approaches for El Dorado County to consider in establishing a strategic
planning process but the key elements should include:
o
statement of purpose or mission;
o
vision for the future;
o
goals, objectives and action plans for accomplishing the mission and vision statements;
and,
o
a system for measuring results linked to the budget process.
The plan's goals and objectives will also drive the budget process as each department will be
expected to show how they are contributing to the strategic plan's goals and objectives through
their activities.
Recommendations
It is recommended that the Board of Supervisors:
Rl. 1
Direct the Chief Administrative Officer to implement a strategic planning process for the
County to include: an assessment of strengths and weaknesses of the County
organization; input from all key stakeholders; a mission statement and vision for the
future of the County; goals, objectives and action plans to achieve the mission and vision;
and, a system for measuring and reporting the County's success in achieving the goals
and objectives;
R1.2 Include financial goals, objectives and policies for the County in the recommended
strategic plan addressing issues such as target reserve levels, cost recovery targets for
County user fees, deficit spending policies and others;
R1.3
Direct the Chief Administrative Officer and department heads to develop goals and
program objectives for their departments consistent with the countywide goals and
objectives developed in the strategic plan;
R1.4
Direct the Chief Administrative Officer and department heads to include links in their
budgets and funding requests to the strategic plan goals and objectives and to develop and
report related performance measures for their departments based on outcomes rather than
workload;
R1.5
Conduct an annual evaluation and update process where accomplishment of plan goals
and objectives is evaluated for the previous year and the plan is updated and revised for
the future;
Harvey M. Rose Accountancy Corporation
R1.6 Incorporate strategic plans developed by individual departments into the countywide
plan.
Costs and Benefits
The primary costs of implementing the above recommendations would be staff time. The County
may choose to retain an outside facilitator for some workshops and compilation of information
for which there would be direct costs. The benefits of the recommendations would include
development of common objectives and direction for all County managers and employees, less
time wasted by staff trying to second guess the wishes of the Board of Supervisors, and a system
for measuring department performance and methods for linking budget allocations to
achievement of agreed upon goals and objectives.
Responses Required_ for Findinp_ s
F1.1 through F1.3
El Dorado County Board of Supervisors
Responses R~ uired for Recommendations
Section 1: Long Range Strategic Planning and the Budget
Rl. 1 through R1.6
El Dorado County Board of Supervisors
Harvey M. Rose Accountancy Corporation
NIFR Strategic Planning Results
3 u1 5
Key Results:
°,' o Customers Satisfied with Applications Development Service Request Outcome.
Activity Name:
DESKTOP SUPPORT
Activity Purpose:
The purpose of the DESKTOP SUPPORT activity is to provide management and support
of the entire desktop life cycle to clients so that they can benefit from a stable
computing platform.
Services that
Desktop Upgrades
comprise the
Hardware Configuration & Pricing
Activity:
Desktop Virus Protection
Distributed Equipment
Help Desk Contacts
Repaired Equipment
Acquired Equipment
Desktop Guidance
Infrastructure Data Archiving & Recovery
Technical Guidance ( Desktop Hardware & Software)
Desktop Installations
Hardware & Software Inventory
Network Server Services
Office Automation Tools
Personal Data Storage
Performance Measures:
RESULT: % of Available Server Services ( 24X7)
Actuals FY 00:
Actuals FY 01:
Anticipated FY 02:
98
Mid Yr Forecast:
Projected FY 03:
Calculation:
Data
Source:
Server logs.
from the IT resource.
of hours " up" / total number of server hours per quarter. ( NOTE: 90 days in the quarter.)
MS Systems Management Server ( SMS), Altiris, Help Desk Tracking software and Internal
Activity Leader:
Jack Coffin
RESULT: % of Available Server Services During Prime Business Hours ( 12X5)
Actuals FY 00:
Actuals FY 01:
Anticipated FY 02:
Nlid Yr Forecast:
Projected FY 03:
Atta chment 1
Page - I off'
Program
The purpose of the Information Technology Program is to provide IT leadership and
Purpose:
services to the client departments so that management can obtain maximum benefit
5.2 () 22 1 3
0 1"
Qrt Result YTD 1 Comments
1 99.72
2 ( 99.81 99.75
3
4
Qrt Result YTD Comments
I 1 100
2 l 100 100
3
4 `
\ IFR Strategic Planning Results
1ut5
Calculation:
# of hours " up" / total number of server hours in the quarter. ( NOTE: 60 work days in the
quarter.)
Data
MS Systems Management Server ( SMS), Altiris, Help Desk Tracking software and Internal
Source:
Server logs.
Activity Leader:
Jack Coffin
OUTPUTS: Number of installed and redeployed desktops
Actuals FY 00:
Actuals FY 01:
Anticipated FY 02:
5600
Mid Yr Forecast:
Projected FY 03:
Calculation:
# of PCs in the installed base + # of replacement and new PCs deployed + : of PCs
" waterfalled" within installed base.
Data Source:
MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software.
Activity Leader:
Jack Coffin
DEMAND: Expected number of installed and redeployed desktops
Actuals FY 00:
Actuals FY 01:
Anticipated FY 02:
5600
Mid Yr Forecast:
Projected FY 03:
Calculation:
-- of PCs in the installed base + t of replacement and new PCs deployed + # of PCs
" waterfalled" within installed base.
Data Source:
MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software.
Activity Leader:
'
Jack Coffin
EFFICIENCY: Cost per installed and redeployed desktop
Actuals FY 00:
Actuals FY 01:
Anticipated FY 02:
Mid Yr Forecast:
Projected FY 03:
Attachment l
Page 2 of 3
5.20?: ? 0F
Qrt , Result WD Comments
1 1426
2 1527 1 1635
3
4
Qrt I Result YTD Comments
1 1465
2 1587 1, 1682
3
4
NIFR Strategic Planning Results
pj i
Calculation:
Number of installed and redeployed desktops divided by the annual budget of the PC/ LAN
Solutions and Support Team.
Data
MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software and
Source:
the budget system.
Activity Leader:
Jack Coffin
Attac hment 1
f 3
Qrt Result YTD I Comments
4
2.
Capital Projects
F2.1
F2.2
F2.3
Using County budget documents it is not possible to determine the status of capital
projects or whether the projects are over or under budget. Capital project status
reporting in the budget would be improved by including comparisons of originally
proposed and actual costs and project timing.
Funding and priority setting for El Dorado County's facility and transportation
capital projects takes place without benefit of a multi- year capital improvement or
facility master plan. As a result, department managers can set project priorities
without formalized direction from the Board of Supervisors and the public. These
priorities may or may not reflect the highest and best use of limited resources in the
opinion of Board members and the public but a method doesn't exist to reach
consensus, formalize and update those priorities.
Both the General Services and Transportation departments have relatively new
directors who have developed project tracking systems that allow for better project
status reporting. The Department of Transportation has a five year capital project
plan prepared in 1995 but it has never been updated. Staff is currently preparing a
new document for review by the Board of Supervisors. With adoption of this plan
and a similar one that County management reports is in the planning stages for
County facility projects, project priorities will be clearer, the budget process
simplified and department accountability for completing projects on time and on
schedule improved.
There are two primary types of multi- year capital projects in El Dorado County. First are
construction and rehabilitation of County facilities such as parks and public buildings that are the
responsibility of the General Services Department. Second are road, bridge and transportation
system projects that are the responsibility of the Department of Transportation. These projects
often span multiple years so their presentation in the budget document is different than
presentation of annual operating revenues and expenditures for most departments.
County Facility Projects
The budget for the General Services Department includes a list of County facility projects
categorized as either carryover or new. This list is first presented in the proposed budget
submitted to the Board of Supervisors in June and then updated for the budget addenda report in
September. Differences between the two lists for FY 2001- 02 are shown in Exhibit 2.1.
10
Harvey M. Rose Accountancy Corporation
Exhibit 2.1
Difference in General Services Department
Capital Projects between the
Proposed and Addenda Budget Documents
FY 2001- 02
Proposed Budget
Budget Addenda Change
# Carryover Projects
Carryover Funding
# New Projects
New Funding
45 72
$ 2,077,786 $ 2,827,090
22 43
$ 1,181,900 $ 2,358,761
27
$ 749,304
21
$ 1,176,861
# Projects Total
Funding Total
67 115 48
$ 3,259,686 $ 5,185,851 $ 1,926,165
Source: FY 2001- 02 Proposed Budget & Workplan and Budget Addenda Report
Section 2: Capital Projects
As can be seen, there is a significant change in the number of projects and funding levels
between the two documents. This reflects the timing of the two budget documents. The proposed
budget presented to the Board in June has to be submitted to the Chief Administrative Officer by
the departments by the end of March/ early April. The September budget addenda information is
prepared five to six months later. By then, more construction activity has taken place during the
prime construction season and the department has more information regarding which projects
will be carried over to the next year. In addition, the original budget submission does not include
carryover parks projects at all which added 19 more carryover projects and $ 371,456 in costs to
the carryover projects in the budget addenda. With a 59 percent change in funding between the
June and September lists, the Board's approval of projects in June is somewhat meaningless.
Besides changes between the two lists, it is not possible to tell from either the status of the
carryover projects in terms of time or costs. The lists simply present all projects with no
indication of whether they are 10 percent or 90 percent done, when project completion is
expected, or whether they are under or over budget. The lists are not prioritized so it is not
possible to tell the order in which projects will be worked on and completed.
While there are many projects in progress and compilation of information on these projects can
be complex, a simple report showing the original budget and schedule compared to actual costs
and schedule could be readily compiled from Department records with a column for briefly
explaining significant variances in time or cost. The Department already maintains a project
tracking list for use internally by management. This document could be modified for reporting to
the Board and for inclusion in the budget documents.
In addition to better reporting of the status of projects, the General Services Department needs a
multi- year master plan, approved by the Board of Supervisors, that establishes project priorities
and includes estimated funding and timing for each project over a multi- year period such as five
years. With agreed upon project priorities, Department management would have clear direction
about how to allocate their resources. Project priorities and available funding would also be
Harvey M. Rose Accountancy Corporation
Section 2: Capital Projects
better aligned with such a plan as it would allow for determination of what should be done given
limited resources and what cannot be done.
New projects could still be added and planned projects deleted after the plan is adopted if
priorities change or funding becomes unavailable. The difference would be that the process
would be formalized so the Board would have to make a conscious choice to delete a project
rather than a project remaining on the list but never getting done. The interim Chief
Administrative Officer reports that plans are underway at the time of preparation of this report to
commence preparation of such a plan, including financing plans, for County facilities.
Department of Transportation Capital Projects and Maintenance Work
Transportation capital projects are presented in a different format in the budget than General
Services projects. In the FY 2001- 02 budget addenda document, the Department presents a list of
approximately $ 24 million worth of capital improvement projects. For each project, a breakdown
of project costs ( labor, overhead, fixed assets, etc.) and the project's revenue source( s) are
presented. The budget addenda document submitted to the Board of Supervisors in September
lists 25 capital projects but does not show the timing or funding status of any of the projects or
sequencing or priorities for the coming year ( see Attachment 2).
As with the General Services Department budget, information is not presented comparing
planned and actual costs and timing of the Department's capital improvement projects. Nor are
projects prioritized in accordance with a multi- year plan approved and updated by the Board of
Supervisors. A five year roads capital improvement project plan was prepared in 1996 but it has
not been updated since according to Department of Transportation management.
The Department's planned road maintenance projects are also shown with the same cost
breakdown as presented for capital projects and with revenue source( s) identified ( see
Attachment 3). Though these projects tend to be single year in scope compared to capital
improvement projects, the work to be done such as patching and overlay, chip seal and traffic
signal maintenance, is not prioritized by long term County goals such as achieving an average
road condition on the County network by a certain date in the future. If specific priorities such as
these were established in a multi- year plan, the Department would have a stronger basis to justify
the allocation of its maintenance dollars. Like most counties in California, El Dorado County
faces extensive deferred maintenance costs in excess of available resources for road and bridge
work. Officially adopted agreed upon priorities are all the more important when need exceeds
resources available.
The Department of Transportation has prioritized its capital improvement projects by three tiers
of priority and is in the process of preparing a new multi- year capital improvement plan. The
Department is intending to use this document as a budgetary document as well as a work
program so that project priorities and resources available will be linked. Department
management's goal is to update the plan annually in advance of the April submittal to the Chief
Administrative Officer and Board of Supervisors.
1 2
Harvey M. Rose Accountancy Corporation
Midyear planning workshops with the Board of Supervisors
Section 2: Capital Projects
To develop the annual plans and budgets for the two departments' capital improvement plans, a
process is needed in advance and in lieu of the budget hearing process in September. By
September, or budget adoption time, it is too late to add capital projects which often require a
fair amount of advance work to obtain funding or to plan in relation to resources available.
With five year plans in place for both departments, workshops should be held with the Board of
Supervisors in January or at a more convenient time but well in advance of budget submission
and adoption. The purpose of the workshops should be to revise and update the plans in
accordance with any changes in circumstances, funding or Board priorities. From that point on,
the plan for the next year should be established and budget submission and adoption should
reflect the agreements reached at those workshops. This would make for a more clear and
streamlined budget process for capital improvement projects as most of the projects and funding
levels would have been previously agreed to or modified well in advance of the Board of
Supervisors review and approval of the proposed budget.
The Department of Transportation does prepare a monthly report on its capital projects but this
report does not include a comparison of planned and actual project timing and costs. While this
does not need to be provided to the Board and public on a monthly basis, it would be useful to
present it at budget time and once more during the year such as at the annual planning workshop
discussed above. Similarly, the General Services Department should prepare such a report for
Board review twice a year, once at its planning workshop and again at budget addenda
submission time. The list of projects included in the proposed budget in June should match that
resulting from the January planning workshop and then be updated for the addenda process in
September based on actual projects completed during the prime construction period and
identification of carryover projects.
Recommendations
It is recommended that the Board of Supervisors:
R2.1
Direct the Director of Transportation to complete its draft five year capital improvement
plan now in progress and direct the General Services Director continue with reported
efforts to develop such a plan for County facilities. The plans should include proposed
priorities for projects, identification of revenue sources for projects, and proposed time
schedules and milestones;
R2.2
Follow a process of collecting input from the public and other County departments on the
proposed five year plans, and adopt both documents to guide the two department's work
plans and budgets;
R2.3
Implement a process where the five year plans for both departments are reviewed and
updated annually in a workshop with the Board of Supervisors that takes place well in
advance of the budget review and hearing process so that department management can
13
Harvey M. Rose Accountancy Corporation
secure funding and other resources in a timely manner to ensure that the highest priority
projects are able to be accomplished in the targeted time frame; and,
R2.4
Direct the Directors of Transportation and General Services to develop and provide
reports twice a year; once when the proposed budget is submitted to the Board and once
at the recommended annual planning workshops, showing all projects in process,
comparing original and actual costs and timing, and explaining any variances in either.
Costs and Benefits
The General Services Department is planning to use the services of an outside consultant in
preparation of their multi- year facilities plan. The cost for this is unknown as of the writing of
this report. There would not be any other new direct costs associated with the above
recommendations. Benefits would include a better use of resources by focusing the General
Services and Transportation departments on specific agreed upon capital project priorities and
road maintenance work, a more streamlined budget process for capital projects, and greater
accountability by department managers for delivery of projects on time and budget.
Responses Required for Findines
F2.1 through F2.4
El Dorado County Board of Supervisors
Responses Required for Recommendations
R2.1 through R2.4
El Dorado County Board of Supervisors
14
Section 2: Capital Projects
Harvey M. Rose Accountancy Corporation
COSICENIER 305 DOf - CAPITAL PROJECTS
EL DORADO COUNTY
WORK PROGRAM
2001- 2002 BUDGET YEAR
1A1RK
SERVICES DINER FIXED VEHICLE OVERHEAD INTRAFUND
ORDER
DESCRIPIION
LABOR
L SUPPLIES CHARGES
ASSETS
USAGE
CHARGES
TRANSFER$
TOTAL
08/ 24/ 2001
REVENUE
REVENUE
SOURCE AMOUNT
SUPPORT TO O THER GOVERNMENT AGENCIES
52101 CONTRIBUTION TO OTHER AGENCY 0 0 50,000 0 0 0 0 50,000 STATE- RSIP 182.9 50,000
53108 US 50 WEST BOUND- PONDEROSA 6 N SHINGLE SIGNALIZATION 0 1,556,300 22,000 0 0 0 114,580 1,692,880 STATE- RSIP 182.6d1 300,000
CALTRANS 300,000
RA2 1 STATE SYSTEM T, IM 1,092,880
53110 NWY 50 IIOV LANE EDN 10 SHINGLE SPRINGS 0 0 0 0 0 0 5,000 5,000 RA2 1 STATE SYSTEM . TIM 5,000
53112 FORHI ROAD IMPROVEMENTS - CITY 0 0 150,000 O 0 0 O 150,000 150,000
CATEGORY TOTAL 0 1,556,300 222,000 0 0 0 119,580 1,897,880 1,897,880
CAPITAL IMPROVEMENT PROJECTS
71317 MISSOURI FLAT INTERCHANGE PSR 0 457,880 28,500 0 0 0 99,620 586,000 FUND BALANCE EDCTC CARRYOVER 96,706
RA2 1 STATE SYSTEM TIM 489,294
71318 EDIT BLVD INTERCHANGE PSR 0 581,000 1,524,000 0 0 0 145,000 2,250,000 EL DORADO HILLS RIF/ SALMON FAL 750,000
OTHER FINANCING SOURCES 1,500,000
71319 CAMINO INTERCHANGE 0 0 0 0 0 0 41,669 41,669 FUND BALANCE EDCTC CARRYOVER 31,669
RA2 2• 5 STATE TIM FEE 10,000
71329 UNITE ROCK RD REALIGII14EIlT 0 27,500 2,500 0 0 0 120,000 150,000 EL DORADO HILLS RIF/ SALMOII FAL 150,000
71350 EDIT BLVD E/ B DIAGONAL 0 2,134,901 682,500 0 0 0 38,849 2,856,250 EL DORADO HILLS RIF/ SALMOII FAL 2,856,250
71351 BIKEPATH- HARVARD WAY/ CLERMONT 70 E011 CSO PARK 0 128,953 500 0 0 0 29,666 159,119 SMVAQ COMV AIR QUALITY) 39,780
COSICENTER 305 DOI - CAPITAL PROJECTS
EL DORADO COUNTY
WORK PROGRAM
1001- 2002 BUDGET YEAR
08/ 24/ 2001
WORK
ORDER DESCRIPTION
LABOR
SERVICES
L SUPPLIES
0111ER
CHARGES
FIXED
ASSETS
VEHICLE
USAGE
OVERHEAD
CHARGES
INTRAFUND
TRANSFERS 10fAL
REVENUE
SOURCE
REVENUE
AMOUNT
TRANSPORTATION ENHANCEMENT ACT 103,719
0111ER GOVT AGENCIES 15,620
BIKEPATII- EL DORADO HILLS BLVD/ fRAHCISC0 TO GOVERNORS
0 47,300 3,700 0 0 0 64,000 115,000 SHVAQ ( DMV AIR QUALITY) 13,225
71352 TRANSPORTATION ENHANCEMENT ACT 101,775
0 IHly 50 ROUTE ADOPTION 0 49,500 500 0 0 0 50,000 100,000 RAZ 1 STATE SYSTEN , TIN 100,000
71353 PONDEROSA RD
0 3,608,527 0 0 0 0 0 3,608,527 FUND BALANCE - UNRESTRICTED 309,649
72100 ROAD REHABILITATION
FUND BALANCE GOVERNORS CONGEST 1,755,690
TRANSPORTATION TAX IDA 43,188
OPERATING TRANSFERS IN 1,500,000
EL 00 HILLS NORTHERLY ALLIGNMENT
0 0 0 0 0 0 40,000 40,000 EL DORADO HILLS RIF/ SALMON FAL 40,000
72332
72334 MISSOURI FLAT/ PLEASANT VALLEY CONNECTOR
0 98,750 1,065,425 0 0 0 101,438 1,265,613 TIN 1,265,613
72335 LATROBE ROAD - WHITE ROCK 0 WETZEL OVIATT
0 464,344 4,500 0 0 0 663,156 1,132,000 EL DORADO HILLS RIF/ SALMON FAL 1,132,000
0 0 0 0 0 0 95,000 95,000 TIM 95,000
72343 CAMERON PARK DRIVE PHASE 11
72353 GRII VLY RD WIDENING/ SIIADOWFAX 10 BROWNS RAVINE 0 4,041,999 1,465,724 0 0 0 166,184 5,673,907 EL DORADO HILLS RIF/ SALMON FAL 1,352,382
TIM 1,588,326
RISC REIMBURSABLE 430,000
LONGTERM ADVANCE 2,303,199
72354 GREEN VALLEY RD WIDENING COMMERCIAL AREA B
0 169,691 411,301 0 0 0 174,693 755,685 TIN 294,717
LONGTERM ADVANCE 460,968
72355
GREEN VALLEY RD WIDENING MORMON ISLAND TO fRANCISCO 0 39,500 2,000 0 0 0 106,000 147,500 EL DORADO HILLS RIF/ SALMON FAL 89,975
TIN 57,525
73346 IIWY 49/ FOWLER LN INTERIM INTERSECTION
0 1,299,900 12,016 0 0 0 11,557 1,323,473 CALTRANS 77,000
1 a
COSTCERTER 305 DOT - CAPITAL PROJECTS
EL DORADO COUNTY
WORK PROGRAM
2001- 2002 BUDGET YEAR
08/ 24/ 2001
ba
D3 rrt
Co rt
( D wn
1RIRK
ORDER DESCRIPTION LABOR
SERVICES
L SUPPLIES
OTHER
CHARGES
FIXED
ASSETS
VEHICLE
USAGE
OVEANEAD
CIIAROES
INTRAFUND
TRANSFERS TOTAL
REVENUE
SOURCE
REVENUE
AMOUNT
II E S ( HAZARD ELIH SEC) 500,000
RAZ 1 STATE SYSTEM TIM 746,473
73349 GREEN VALLEY NO 41 MORMON ISLAND 0 1,720,499 667,369 0 0 0 70,001 2,457,869 EL DORADO HILLS RIF/ SALMON FAL 1,046,708
TIM 669,206
CIP INIRA DEPARTMENT 65,000
MISC REIMBURSABLE 11,086
LONGTERM ADVANCE 665,869
73351 METAL BEAM GUARDRAILS - 7 LOCATIONS 0 0 0 0 0 0 15,000 15,000 11 E S ( HAZARD ELIH SEC) 15,000
77103 BRIDGES/ GRIT VLY RD- RECONST GROG 0 DRY CRK 0 18,278 256,000 0 0 0 54,110 328,388 FUND BALANCE RSTP CARRYOVER 135,091
IIBRR ( IDLY BRIDGE RE/ REII) 193,297
77108 BRIDGES/ BRIDGEPORT SCHOOL RD- REPLACE BRGE 0 398,804 27,000 0 0 0 49,780 475,584 FUND BALANCE RSTP CARRYOVER 163,706
RSTP STATE EXCHANGE 205,286
HBRR ( IIWY BRIDGE RE/ REN) 106,592
77109 GR11 VLY RD BRIDGE 0 TENNESSEE 0 140,000 10,500 0 0 0 24,500 175,000 FUND BALANCE RSTP CARRYOVER 35,088
RSTP STATE EXCHANGE 83,912
IIBRR ( NWY BRIDGE RE/ REII) 56,000
77110 SALMON FALLS BRIDGE 2 AMERICAN RIVER 0 139,800 4,684 0 0 0 20,200 164,684 FUND BALANCE RSTP CARRYOVER 11,566
RSTP STATE EXCHANGE 11,470
HORN ( IIWY BRIDGE HIRER) 141,648
77112 BRIDGES - HT MURPHY 0 AMERICAN RIVER 0 135,000 0 0 0 0 23,606 158,606 FUND BALANCE RSTP CARRYOVER 28,606
RSTP STATE EXCHANGE 10,000
IIBRR ( IIWY BRIDGE RE/ REII) 120,000
77113 BRIDGE BARRIER RAILING 0 98,000 0 0 0 0 23,022 121,022 FUND BALANCE RSTP CARRYOVER 3,545
RSTP STATE EXCHANGE 11,241
IIBRR ( IIWY BRIDGE RE/ REII) 106,236
MIRK UROLN
CATEGORY TOTAL
- P
W a
COSTCLYTER 305 DOT - CAPITAL PROJECTS EL DORADO COUNTY
WORK PROGRAM
2001- 2002 BUDGET YEAR
79999
SUBTOTAL
0 17,356,426 6,390,719
0
0
0
1,720,445 25,467,590
25,467,590
TOTA L AVOWED C0SI $_
0
0
0
0
0
0
0
0
0
TOTAL
0 17,356,426 6,390,719
0
0
0
1,720,445 25,467,590
25,467,590
08/ 24/ 2001
UESCRI1- Tfoil
SERVICES OTHER
LABOR A SUPPLIES CHARGES
FIXED
ASSETS
VEHICLE
USAGE
OVERHEAD
CHARGES
INTRAFUND
TRANSFERS TOTAL
REVENUE
SOURCE
REVENUE
AMOUNT
COHIIHGEHCY - PROJECTS 1101 COMPLETED 0 0 0 0 0 0 - 626,186 - 626,186 TIM - 626,186
0 15,800,126 6,168,719 0 0 0 1,600,865 23,569,710
23,569,710
tA) RK
SERVICES OTHER FIXED VEHICLE OVERHEAD INTRAFUND REVENUE
REVENUE
ORDER
DESCRIPTION
LABOR
L SUPPLIES
CHARGES
ASSETS
USAGE
CHARGES
TRANSFERS
TOTAL
SOURCE
AMOUNT
R OAD MAINTENACE PROJ ECTS
COSICENTER 306 001 - ROADS
EL DORADO COUNTY
WORK PROGRAM
2001- 2002 BUDGET YEAR
08/ 24/ 2001
41100 IRAF SIG L LGT MATH\ WS RD 11,628 161,650 0 0 1,663 5,145 0 180,086 DEPARTMENT DISCRETIONARY 180,086
41101 SIGNAL MAINT - TO 0 13,000 0 0 0 0 0 13,000 DEPARTMENT DISCRETIONARY 13,000
43100 I NSTALL NEW SGH, SIRP L Sf1Y DEV/ WS RD 76,654 18,050 0 0 11,689 36,155 0 142,578 DEPARTMENT DISCRETIONARY 142,578
43101 INSTALL SGH, SIRP A SFTY OEV/ CATTLE GUARD INSTALL TO 3,037 3,150 0 0 319 986 0 7,492 DEPARTMENT DISCRETIONARY 7,492
44100 PATCHING/ OVERLAY PAIC11111G ( BASE RECONST.) 265,812 344,356 0 0 123,300 116,585 0 850,061 DEPARTMENT DISCRETIONARY 550,061
44101 PATCIIIIIG/ VS O/ L PATCH - 10 ( BASE RECONST.) 99,209 192,385 0 0 74,493 53,504 0 419,591 DEPARTMENT DISCRETIONARY 419,591
45136 CONTRACT OVERLAY- EL DORADO HILLS BUS PARK 0 36,000 0 0 0 0 0 36,000 MISC REIMBURSABLE 18,000
OPERA71NG TRANSFERS IN 18,000
46100 CHIP SEAL/ WS RD 297,113 481,153 0 0 139,783 131,667 0 1,049,716 DEPARTMENT DISCRETIONARY 1,049,716
46101 CHIPSEAL TO 0 230,000 0 0 0 0 0 230,000 DEPARTMENT DISCRETIONARY 230,000
48100 PAVEMENT MANAGEMENT SYSTEM 43,714 1,900 0 0 1,476 14,588 0 61,678 DEPARTMENT DISCRETIONARY 61,678
48101 MAINTAINED MILEAGE 13,214 150 0 0 36 4,346 0 17,746 DEPARTMENT DISCRETIONARY 17,746
48102 ROUT MAIN/ RD SUR POT IILS 536,044 302,926 0 0 313,323 251,899 0 1,404,192 DEPARTMENT DISCRETIONARY 1,404,192
48103 ROUT MAIN/ AC GERMS 3,834 9,297 0 0 2,226 1,827 0 17,184 DEPARTMENT DISCRETIONARY 17,184
48104 ROUT MATH/ CRACK SEALS 27,778 30,300 0 0 18,111 14,016 0 90,205 DEPARTMENT DISCRETIONARY 90,205
48105 ROUT MAIN/ RD SUR GRAD 7,895 0 0 0 3,696 3,331 0 14,922 DEPARTMENT. DISCRETIOHARY 14,922
48107 ROUT MAIN/ ORUSII L WEED 162,995 0 0 0 87,839 75,470 0 326,304 DEPARTMENT DISCRETIONARY 326,304
COSTCENTER 306 DOT - ROADS
EL DORADO COUNTY
08/ 24/ 2001
WORK PROGRAM
2001- 2002 BUDGET YEAR
Won K
OROLIT DESCRI1111011 LABOR
SERVICES
R SUPPLIES
OTHER
CHARGES
FIXED
ASSETS
VEHICLE
USAGE
OVERHEAD
CHARGES
INTRATUND
TRANSFERS TOTAL
REVENUE
SOORCE
REVENGE
AMOUNT
48108 ROUT MAIN/ RD SIDE DITCH 156,884 1,208 0 0 86,882 72,512 0 317,486 DEPARTMENT DISCRETIONARY 317,486
48109 ROUT MAINT/ DRAINAGE EASHEIII 759 0 0 0 369 333 0 1,461 DEPARTMENT DISCRETIONARY 1,461
48110 ROIL MAIN/ SWEEPING 41,701 1,200 0 0 24,884 20,122 0 87,901 DEPARTMENT DISCRETIONARY 87,907
46111 ROUT MAIN/ CLN- RPR CULVERT 280,924 22,647 0 0 140,067 125,593 0 569,231 DEPARTMENT DISCRETIONARY 569,231
68111 ROUT HAITI/ TNCE, GORL, OAR REP 8,354 10,000 0 0 4,066 3,664 0 26,084 MISCELLANEOUS SERVICES/ INSPECT 5,000
DEPARTMENT DISCRETIONARY 21,084
48114 RaOT RAIN/ SIGH HAIRY - 115 278,130 24,467 0 0 78,784 128,779 0 $ 10,160 MISCELLANEOUS SERVICES/ INSPECT 5,000
DEPARTMENT DISCRETIONARY 505,160
48115 ROUT MAIN/ CNTLR L MRK HAITI - WS 334,573 129,117 0 0 66,208 155,792 0 705,690 DEPARTMENT DISCRETIONARY 705,690
48116 ROUT MAIN/ DEAD ANIMAL REMOVAL 0 15,000 39,000 0 0 0 0 54,000 DEPARTMENT DISCRETIONARY 54,000
48118 ROOT MAIN/ 8RDG MAIN ; 79,741 56,417 0 0 38,849 34,975 0 209,984 DEPARTMENT DISCRETIONARY 209,984
46119 YARD MAINTENANCE 10,777 4,097 0 0 5,434 4,799 0 25,107 DEPARTMENT DISCRETIONARY 25,107
48122 ROOT MAINT/ EROSION 1,639 1,400 0 0 1,256 902 0 5,197 DEPARTMENT DISCRETIONARY 5,197
48123 EMERGENCY RESPONSE 4,810 0 0 0 2,347 2,110 0 9,267 DEPARTMENT DISCRETIONARY 9,267
48124 ROUT HAIRY/ SPRAYING 22,784 48,067 0 0 11,098 9,993 0 91,942 DEPARTMENT DISCRETIONARY 91,942
48127 DURAPATCHING 126,642 53,193 0 0 68,777 58,383 0 306,995 DEPARTMENT DISCRETIONARY 306,995
48129 SIGN REMOVAL IN ROW 4,149 0 0 0 148 5,828 O 1 0,125 DEPARTMENT DISCRETIONARY 10,125
48131 SIGN MAINTENANCE - TO 6,789 2,900 0 0 1,063 3,287 0 14,039 DEPARTMENT DISCRETIONARY 14,039
W
W
COSFCENTER 306 DOT - ROADS
EL DORADO COUNTY
WORK PROGRAM
2001- 20OZ BUDGET YEAR
08/ 24/ 2001
QQ
FD
O
rt
rt
W
O
( D
WORK
ORDER DESCRIPTION LABOR
SERVICES
i SUPPLIES
OTHER
CHARGES
FIXED
ASSETS
VEHICLE
USAGE
OVERHEAD
CHARGES
INTRAFUND
TRANSFERS TOTAL
REVENUE
SOURCE
REVENUE
AMOUR I
48132 CENTERLINE HAIRY - TO 16,870 22,950 0 0 3,724 8,017 0 51,561 DEPARTMENT DISCRETIONARY 51,561
48134 ROUT MAIHT/ FNCE, GURL, PAR REP TO 380 0 0 0 190 167 0 737 DEPARTMENT DISCRETIONARY 737
48135 R0111 MAIIII/ BRIDGE HAIRY. T O 3110 0 0 0 190 167 0 737 DEPARTMENT DISCRETIONARY 737
48901 SAFETY PROJ - 2 WAY LEFT TURN LN/ PLEASANT VLY RD E/ O O. S. 0 10,000 0 0 0 0 0 10,000 DEPARTMENT DISCRETIONARY 10,000
45902 SAFETY PROJ - 2 WAY LEFT TURN LM/ SUNSET TO FRENCH CRK 0 15,000 0 0 0 - 0 0 15,000 DEPARTMENT DISCRETIONARY 15,000
48903 SAFETY PROJ - LEFT RUN L11/ GREEN VLY 0 W DEER VLY 0 10,000 0 0 0 0 0 10,000 DEPARTMENT DISCRETIONARY 10,000
48904 SAFETY PROD - ALL WAY SLOP/ COLD SPROS 0 GOLD HILL 0 15,000 0 0 0 0 0 15,000 DEPARTMENT DISCRETIONARY 15,000
48908 SAFETY PROJ - LRDSCPE ISLANDS/ CCC TO DUMP/ SPREAD ROCK 0 30,000 0 0 0 0 0 30,000 DEPARTMENT DISCRETIONARY 30,000
49100 SNOW REMOVAL/ WS 90,408 45,213 0 0 30,828 35,275 0 201,724 DEPARTMENT DISCRETIONARY 201,724
49101 SNOW REMOVAL/ TO 697,396 76,437 4,768 0 271,154 217,112 0 1,266,867 DEPARTMENT DISCRETIONARY 1,266,867
49275 DOT/ FOREST SERVICE CUL- DE- SACS 31,031 69,615 0 0 7,839 26,067 O 134,552 DEPARTMENT DISCRETIONARY 134,552
CATEGORY TOTAL 3,744,080 2,488,245 43,768 0 1,642,119 1,623,396 0 9,541,600
9,541,608
SUPPORT TO O THER GOVERNMENT AGENCIES
50000 CAPITAL IMPROVEMENTS 59,230 0 0 0 0 52,850 - 112,080 0
52101 CONIRIOUTION TO O111ER AGENCY 0 0 86,000 0 0 0 0 86,000
,
TRANSPORTATION TAX IDA 86,000
CATEGORY TOTAL 59,230 0 86,000 0 0 52,850 - 112,080 86,000
86,000
b
3.
Budget Timing, Information and Analysis
F3.1
F3.2
F3.3
The Board of Supervisors receives very comprehensive, well organized reports on
the status of the budget at mid- year but no further formal reports until they receive
the proposed budget for the next fiscal year in June. As stewards of the County's
financial resources, more regularly produced status reports and updates should be
provided with less detail than the mid- year reports but with enough information to
allow the Board to monitor performance and receive early warnings of potential
fiscal problems.
The County's financial information system allows for production of a wide variety
of ad- hoc reports and analysis of expenditures and revenues accessible to all
department managers. A monthly report to the Board showing actual expenditures
and revenues by department, with a projection of the County's financial position at
year end, could easily be produced and would facilitate more Board and public
involvement in monitoring the County's fiscal status. It would eliminate surprise
developments such as the increase from $ 12.5 to $ 21.5 million in fund balance
available reported between the proposed and budget addenda for FY 2001- 02.
Information of this sort would also provide a basis for other questions and analyses
of situations when revenues or expenditures are not at the level originally projected.
The analysis of the proposed budget each year consumes many months of staff time
but largely focuses on incremental appropriations requested by the departments or
recommended by the Chief Administrative Officer but not the baseline budget.
Oftentimes, savings can be realized in the baseline budget by improving the
efficiency of operations, reorganizing or consolidating programs or increasing
revenues. One of the most effective means of identifying opportunities for savings in
the baseline budget is through departme ntal performance audits.
The major points of public presentation and discussion about the County's budget are: 1) the
mid- year budget report to the Board of Supervisors; 2) presentation of the proposed annual
budget in June; 3) presentation of the addenda budget in August; and, 4) budget hearings in
September. At all four points, a great deal of useful information is provided to the Board
covering all departments, revenue sources and operational issues. The information is prepared by
the Chief Administrative Officer and, in the past, discussion about the contents were largely
between the Board and the Chief Administrative Officer and the Auditor- Controller. For the FY
2001- 02 budget, the process was expanded when the Board of Supervisors requested that each
department make a presentation about their budget and operations.
The mid- year budget report provided in February 2002 contained discussion of projected fund
balance, expenditures and revenues by department, a discussion of expected increases in health
benefits costs, detailed revenue projections ( summarizing projections prepared by the Auditor-
Controller), capital project highlights, a discussion of the State budget, a regional economic
forecast, salary projections for FY 2002- 03, and departmental savings. It provides a good deal of
information of interest to the Board of Supervisors, department managers and the public.
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Timing of County Budget Review and Approval
Section 3: Budget Timing, Information and Analysis
The proposed budget document for the subsequent fiscal year is provided in June of each year
and includes detailed revenue projections and proposed expenditures for each department.
Information for each department is also presented including staffing detail, descriptions of all
major programs operated by the department, workload indicators, actual revenues and
expenditures for the previous two fiscal years and proposed revenues and expenditures by major
programs or costs centers for all departments. An overview of the County's financial situation is
presented including detailed revenue estimates for the budget year, changes in State and other
funding sources, and roll ups of expenditure data by fund and functional areas.
The third and final budget report prepared by the Chief Administrative Officer is provided in
August. This report provides final revenue and expenditure estimates for the year after the State
budget has been adopted and actual fund balances are known based on better and more complete
prior year actual data.
While all three reports provided to the Board of Supervisors include a substantial amount of
useful information, there are no routinely produced reports between these three to keep the Board
abreast of the overall fiscal situation of the County and to have early warnings of potential
problems. Budget related items do come up at Board meetings if an individual department is
requesting mid- year supplemental funding or if the supervisors request information on a
particular department or a budget related topic. However, fiscal information is not otherwise
routinely reported in a standardized report to the Board to allow for comparisons and trend
analyses throughout the year.
Department budget staff spend many months of the year going through their internal budget
review and preparation processes and then explaining and defending their proposals to the Chief
Administrative Office before they are submitted to the Board of Supervisors. Then, for many
departments, there are additional analyses and expenditure plans to be prepared between June
and September as actual fund balance amounts become known, the State budget is adopted and
other adjustments are made. The net result is a lengthy process consuming more than half the
year and a budget mostly prepared six months earlier being reviewed by the Board of
Supervisors in September.
While the County is subject to State timing requirements governing the preparation and adoption
of the budget, attempts should be made to complete more of the budget process in June so that
fewer staff hours are consumed in duplicative efforts between June and September and so the
budget reviewed and discussed by the Board of Supervisors is more current. A review of changes
between the proposed and addenda budget for FY 2001- 02 shows that budget appropriations
increased by $ 23 million between June and September. Most of the change, or 77.3 percent, was
in the General Fund and Roads Fund. Exhibit 3.1 presents the changes for all funds.
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Harvey M. Rose Accountancy Corporation
Source: Proposed and Addenda Budgets, FY 2002- 03
The $ 9.5 million in Roads Fund monies was mostly from capital project carryovers and increases
in estimated fund balance. For the General Fund, the increase was primarily generated from
carryover fund balance, mostly due to a combination of capital project carryover, actual
expenditures being less than budgeted, and actual revenues being more than budgeted the
previous year. The fourth largest contributor to the increase, Accumulated Capital Outlay, was
also the result of an increase in fund balance available compared to what was estimated in the
proposed budget due to more projects being carried over from the previous year than anticipated
in June.
Section 3: Budget Timing, Information and Analysis
By producing more detailed projections of revenues and expenditures throughout the year,
particularly in the second half, and projecting year- end fund balance monthly, the County's
estimates of carryover fund balance in June should become more accurate and closer to the
amounts now not identified until September. With better tracking and reporting of capital project
expenditures and timing, as recommended in Section 2 of this report, and monthly projections of
year- end fund balance for the Roads and Accumulated Capital Outlay funds, the discrepancy
between the June and September budget for capital project carryover funds should also be
decreased. The net result of more accurate forecasting would be fewer changes between June and
September and less work for all County staff in creating and analyzing a second budget
document with numerous revisions for the September hearings.
Though the State budget could be and probably will be changed to some extent between June and
September, most of it should be known and in place by June based on the Governor's budget.
County estimates of the budget in June should be reasonably accurate for most of the State
funding received. The County should endeavor to reduce discrepancies between the two budgets
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Exhibit 3.1
Changes between Proposed and Addenda Budget
Fund
By Fund,
Proposed
Budget
FY 2001- 02
Addenda
Budget Difference
Total
Difference
Roads Fund $ 31,856,908 $ 41,367,148 $ 9,510,240 41.2%
General Fund 147,900,815 156,236,963 8,336,148 36.1%
Health Department 17,128,851 19,719,350 2,590,499 11.2%
Accumulated Capital Outlay 3,673,718 5,403,519 1,729,801 7.5%
Mental Health Services 9,749,849 10,463,260 713,411 3.1%
Tobacco Settlement 487,860 487,860 2.1%
Road District 2,460,871 2,617,875 157,004 0.7%
Community Services 7,986,053 8,026,027 39,974 0.2%
Special Aviation 20,000 20,000 - 0.0%
Fish & Game 5,000 5,000 - 0.0%
EIR Development Fees 300,000 300,000 - 0.0%
Erosion Control 4,918,455 4,413,840 ( 504,615) - 2.2%
TOTAL $ 226,000,520 $ 249,060,842 $ 23,060,322 100.0%
Section 3: Budget Timing, Information and Analysis
and complete most of the budget process in June, with only some minor changes to be approved
in September.
While production of the three budget reports that the Board now receives involves a substantial
amount of work for the Chief Administrative Officer and department fiscal staffs, other regularly
provided information between these three reports is needed. Current budget information is
readily available on the County's Financial Management Information System ( FAMIS) and
could be produced without extensive staff work. Of key importance for a monthly report is:
1. Budgeted vs. actual expenditures and revenues by department and major revenue source
2. Explanations of major variances between budgeted and actual expenditures and revenues
3. Projected expenditures, revenues and fund balances, by fund, for year end
4. Key performance indicators
This information would provide ongoing assessments of the County's fiscal situation and
individual department performance and would serve as a supplement to the annual budget review
and approval process by making the Board aware of issues affecting certain revenues or
individual departments during the year. The Interim Chief Administrative Officer directed all
department heads in April 2002 to undertake detailed re- computations of their estimated year-end
Net County Costs to improve the forecast for FY 2002- 03.
Even though monthly reports at the early part of the year would generally not be too revealing
with so little time passed since budget adoption, the Board should still receive these reports as
they will serve as the foundation for subsequent reports during the year. As the year progresses,
the Board may want to request other special reports with more detail on a certain department or
revenue or an issue such as turnover or workers compensation claims if a particular department
is experiencing a high rate of claims.
The County needs to analyze its baseline programs and budgets
Another type of information that would be useful to inform the annual budget process is
evaluations or performance audits of individual departments and programs conducted throughout
the year. This would provide the Board with more detail that could be used at budget time
regarding all aspects of individual department operations and provide a stronger basis for
decisions about baseline department funding levels.
The budget review process assumes that a baseline level of funding will be provided for all
departments. The discussion in the proposed budget regarding funding changes almost entirely
deals with incremental funding levels, or additions to the base level of funding. As in most
counties, the Chief Administrative Office's analysis of budget requests submitted by the
departments is focused primarily on any increases to the baseline budget but generally does not
question the existing level of funding. Comments in the proposed budget document focus on
increases or changes in the budget and recommendations on what new positions or programs
should be funded, if any. For the most part there is no discussion or recommendations to
decrease funding of the baseline budget through improved efficiency and/ or increased revenue.
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Section 3: Budget Timing, Information and Analysis
There is an implicit assumption in the budget review that existing allocation levels should not be
changed.
In fact in many instances changes could be made to department operations or business processes
and costs reduced through efficiency improvements or revenues increased through improved
collections or establishing fee levels that capture more of the costs actually being incurred. One
way of identifying such changes is through detailed review of department operations through
performance auditing.
Performance auditing can briefly be described as a review of all aspects of a department's
operations to determine if the department is operating in compliance with all applicable laws and
as efficiently, effectively and economically as possible. Performance audits can be conducted by
outside consultants or in- house staff. While regular conduct of performance audits might
represent a new cost to the County, if new staff is hired or consultants are used,' over time audits
should more than pay for themselves with cost savings and/ or revenue increases for the
departments reviewed. Another benefit would be improved service levels for the public by
identifying improvements in business processes and methods of streamlining operations.
El Dorado County engaged a consultant to conduct a performance audit of the Department of
Transportation and is planning one soon for the Department of Social Services. Efforts such as
these should be continued and expanded to include all other departments on a multi- year cycle.
Performance audits should take place throughout the year but their recommendations could be
used in the budget process by identifying areas where departments could operate more efficiently
particularly in the base budget. For example, a recently conducted analysis of Sheriffs
Department staffing conducted independent of their budget preparation process recommended
adding more permanent positions to reduce overtime. An analysis of a department's management
structure might reveal an opportunity to consolidate and reduce management positions based on
an analysis of duties performed. An audit of user fees charged by the County might show that
they are not fully recovering costs and should be adjusted accordingly.
In some jurisdictions performance audits are conducted on an ongoing basis so that all
departments are audited over a certain number of years. Other counties select audit topics
annually based on an assessment of the risk or exposure of each department and the potential
impact of realizing improvements in that department. Other jurisdictions conduct performance
audits as the need arises. An ongoing performance audit program in El Dorado County would
have multiple benefits including improved service levels, reduced costs of operations and
making resources available for other purposes.
1 The County should explore the possibility of conducting performance audits with existing audit staff through re-prioritization
of their current duties. If this is possible, new costs would not be incurred.
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Harvey M. Rose Accountancy Corporation
Recommendations
It is recommended that the Board of Supervisors:
Costs and Benefits
Section 3: Budget Timing, Information and Analysis
R3.1
Direct the Chief Administrative Officer and/ or the Auditor- Controller to begin producing
monthly fiscal status reports showing a comparison of budgeted and actual expenditures
and revenues by department, projected expenditures and revenues through year end,
projected year- end fund balance for each of the County's funds based on the latest actual
revenues and expenditures, and selected key performance indicators for individual
departments;
R3.2
Direct the Chief Administrative Officer to develop and implement a plan to reduce
differences between the proposed budgets in June and September and reduce County staff
time spent preparing for the second budget hearing by using the recommended monthly
projections of revenues, expenditures and fund balance and by more closely monitoring
capital project progress and funding in the second half of the fiscal year;
R3.3
Direct the Chief Administrative Officer to implement a performance audit program to be
conducted either in- house by staff in the Auditor- Controller's office, staff reporting
directly to the Board of Supervisors, by consultants, or a combination of in- house staff
and external consultants; and,
R3.4 Establish a performance audit schedule using a risk assessment approach where all
departments are evaluated against a set of criteria to indicate where the largest benefits
are likely to occur from conducting performance audits.
The costs of implementing the above financial forecasting recommendations would primarily be
existing staff time. The benefits would include staff time now spent preparing for the September
budget addenda process becoming available for other purposes and more of the budget process
being complete in June.
The costs of an ongoing performance audit program would depend on whether new staff is hired
and, if so, the number and level of audits to be conducted in a year. Assuming two to three audits
would be typical and two to three staff positions, estimated costs would be between $ 100,000
and $ 200,000 per year. To the extent existing audit staff could be used for this purpose by re-prioritizing
their activities rather than adding new staff, additional costs would not be incurred.
The benefits of a performance audit program should greatly exceed the costs in terms of cost
savings and revenue increases identified through the performance audit process.
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Harvey M. Rose Accountancy Corporation
Responses Required for Findings
F3.1 through F3.3
El Dorado County Board of Supervisors
Responses Required for Recommendations
R3.1 through R3.4
El Dorado County Board of Supervisors
Section 3: Budget Timing, Information and Analysis
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Harvey M. Rose Accountancy Corporation
4.
Internal Service Funds
F4.1
F4.2
F4.3
F4.4
The County budget includes two internal service funds; the risk management fund
covers centralized County insurance costs and the fleet management fund covers the
County's vehicle maintenance and replacement services. Internal service fund costs
are not as predictable as operating departments because they rely on forecasts of
future needs and variables such as the number of employees who will need health
services or be injured on the job, the extent to which claims will be filed against the
County and the number of vehicles that will need to be replaced. The budget for
these two funds in FY 2001- 02 is approximately $ 20.9 million and together the
County maintains reserves for these two funds of another approximately $ 16
million. This level of expenditure and reserves represents a larger budget than most
County departments.
Key information on assumptions used for these funds is not fully disclosed in the
proposed and addenda budget documents to assist the Board of Supervisors in
determining the appropriate level of appropriations and reserves for these funds.
The budget does not present actual expenditures for previous years or projections of
expenditures for subsequent years. Without this information it is not easy to
determine if appropriate funding and reserves are in place. If too much is budgeted
and reserved, budget resources are tied up that could otherwise be used for other
purposes. If too little is budgeted, the County may need to reduce expenditures
elsewhere or use contingency funds to meet its insurance or fleet obligations.
The Risk Management budget for FY 2001- 02 includes reserves based on five year
projections for the County's risk management fund. The basis for these projections
should be provided to the Board of Supervisors, who should then adopt a County
policy regarding appropriate reserve levels for each type of insurance.
Historical and projected vehicle purchase expenditures are not presented in the
budget. Such information would help the Board determine an appropriate level of
funding and reserves for the County's vehicle replacement fund.
Internal service funds are defined as funds used to account for the financing of goods or services
provided by one department or agency to other departments or agencies, on a cost reimbursement
basis. El Dorado County has two such funds: 1) Risk Management and 2) Vehicle Replacement.
The Risk Management fund is used to account for payments from all County departments to
cover their share of the County's costs for general liability, employee health and workers'
compensation insurance. The costs covered by the monies in this fund include claims payments,
legal costs, insurance premiums for excess insurance', a third party administrator and staff and
indirect costs of the County Risk Management Office.
1 The County is self- insured but buys third party commercial insurance only for incidents above a certain dollar
threshold. This helps prevent any dramatic swings in pay outs from year to year.
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Section 4: Internal Service Funds
The fleet management fund charges each department for the costs of maintaining and acquiring
and maintaining the department's vehicles and heavy equipment. The charges also cover the
costs of County fleet management staff and related indirect costs.
Key budgetary decisions to be made for these internal service funds are: a) the level of
appropriation to include in the budget to meet annual expenses; and, b) the level of reserves to
include in the fund to cover known future liabilities. Charges to customer departments are based
on appropriated annual expenditures and a proportionate share of reserves.
Annual appropriations are needed to cover the operating costs for a single budget year. Reserves
are established for internal service funds to cover known or expected costs beyond what is
expected in the budget year. Particularly with insurance, costs can be paid over multiple years.
Although costs can be estimated for a claim filed in the current year, the case may not actually be
settled for several years out. The risk management fund reserve provides funds for these type of
situations and for unexpected pay outs in the event that a large claim against the County is settled
sooner than expected or an unpredicted unusually high employee disability payment has to be
made in a single year. Commercial excess insurance is also purchased by the County to cover
high cost unusual cases. Fleet management fund reserves might be used if a number of vehicles
or heavy equipment unexpectedly need replacement in addition to what is expected in the County
vehicle replacement schedule.
Insurance expenditures are determined with input from actuaries who produce multi- year
projections of likely future pay outs based on historical loss and expenditure data, known claims
filed, demographics of the work force, changes in law and other contributing factors. For fleet
management, maintenance and replacement costs can be projected based on existing fleet
characteristics such as age and mileage plus any projected increases in fleet size or mix needed
based on new or expanded programs or workload in the County.
Risk Management Fund
As mentioned above, El Dorado County's risk management fund is comprised of three
components:
1) employee health insurance;
2) general liability; and
3) workers' compensation.
Each represents a significant cost to the County but the budget document does not present details
on the three components. Instead, the County risk management fund is presented in aggregate
with no breakdown of how much of the total cost is attributable to each component. Total
budgeted expenditures for FY 2001- 02 were approximately $ 18.1 million for all components of
the risk management program. This amount is separate from the reserves kept in the risk
management fund to cover known and projected insurance liabilities in future years. The budget
document does not report the approximately $ 12 million reserved for the risk management fund
nor does it report how much of this is attributable to each of the three components of the fund.
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Section 4: Internal Service Funds
Details on the risk management fund should be presented in the proposed budget for a number of
reasons. First, it is important for the Board of Supervisors to know which costs are increasing,
which are decreasing, and what, if anything, County management has done or can do to control
these costs. For example, employee health insurance costs are expected to increase significantly
in the next year, an issue that was widely discussed in the budget hearings for FY 2001- 02, but it
would be useful to present these costs in the context of overall health insurance costs, separate
from general liability and worker's compensation costs.
Increases in workers' compensation costs cannot always be controlled but a large increase may
raise questions about the extent to which County management has implemented safety training
programs for employees. Similarly, a rise in risk management costs should be reviewed to
determine if certain exposures resulting in frequent claims have been effectively dealt with by
management.
The proposed budget document for FY 2001- 02 presents information about the Risk
Management office that is part of the Chief Administrative Office. The document presents
revenues and costs for the Risk Management office, including County staff, claims payments and
other administrative cost, as follows:
Exhibit 4.1
Risk Management Revenues and Costs
Presented in the Proposed FY 2001- 02 Budget
FY 1999- 00 through FY 2001- 02
As can be the Services and Supplies expenditure line items of $ 17.4 million for FY 2001- 02
represents the bulk of risk management annual costs. Since this is such a large amount and is
comprised of a number of different costs, more detail should be provided in the budget including
3 1
Harvey M. Rose Accountancy Corporation
Actual
FY 1999- 00
Approved
FY 2000- 01
CAO
Recommended
FY 2001- 02
Revenues:
Charges to Departments $ 12,764,911 $ 14,824,755 $ 17,194,416
Use of Money & Property 684,255 594,007 527,506
Fund Balance - 1,199,008 366,515
Other Sources 1,500 4,000 1,500
Miscellaneous 103,356 166,667
Total $ 13,554,022 $ 16,788,437 $ 18,089,937
Expenditures:
Salaries & Benefits 378,356 415,759 427,897
Services & Supplies 13,914,111 16,165,149 17,427,744
Other Charges 159,663 207,531 231,094
Intrafund Transfers 2,390 3,200
Total $ 14,454,520 $ 16,788,439 $ 18,089,935
Section 4: Internal Service Funds
how much is for claims payments, legal services, the third party administrator, excess insurance
premiums, and other costs, for each of the three risk management fund components.
Staffing for the office and workload indicators are presented in the proposed budget document as
is a description of the office's programs and the Chief Administrative Officer's recommended
changes in the budget.
Determining Appropriate Reserve Levels for Internal Service Funds
The revenue discussion includes the statement that the fund will be relying less on fund balance
than it has in the past for health and worker's compensation. The discussion reports that reserves
for the General Liability program are greater than what is needed and that Worker's
Compensation reserves are lower than needed according to an actuarial analysis performed for
the County. The Chief Administrative Office reports that it has prepared a five year plan to
achieve reserves at a 70 percent confidence level for both the General Liability and Worker's
Compensation fund. The 70 percent confidence level is described as a reserve level that will
statistically be sufficient or better in 70 percent of the cases and inadequate 30 percent of the
time.
While it is laudable that the budget discloses the imbalance in reserves found in the two funds
and a plan to correct it, the discussion has some deficiencies from a public decision making
perspective. First, the actual amount of reserves in the two fund components are not presented in
the budget nor is the fiscal impact of adopting the 70 percent confidence level approach clearly
laid out. Alternative reserve scenarios are not presented so that the Board could see the fiscal
impact of choosing other approaches to funding reserves for these funds at the 70 percent
confidence level.
The choice of a lower reserve level, which would not prevent the County from meeting its
current year claims payment obligations, could potentially mean millions of dollars available for
other purposes in the budget. On the other hand, the Board of Supervisors may want to adopt a
higher reserve level policy that would require increasing the charges paid by departments to
increase reserve levels in the fund. To make an informed decision, the budget should include the
following:
o
Current amounts in reserve, shown separately for Workers' Compensation, General Liability
and Health Benefits
u
Three years of projected actual expenditures for the budget year and the next five to ten
years, shown separately for Workers' Compensation, General Liability and Health Benefits
u
The amount needed to fund reserves at alternative confidence levels, covering the spectrum
of possible approaches ranging from no reserves for future year expenses if a " pay as you go"
policy is adopted, funding to cover the current year and some future costs, funding to cover
the current year and some but not all projected future costs, and funding to cover the current
year and all projected future costs.
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Harvey M. RoseAccountancy Corporation
Exhibit 4.2
Example of Information
to Provide to the Board of Supervisors
for Consideration of Alternative Insurance Reserve Levels
for Internal Service Funds
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Section 4: Internal Service Funds
Counties and public jurisdictions have varying policies on reserves. On one end of the spectrum,
some counties and other public jurisdictions simply budget for their expected payments in the
budget year. Others choose to maintain reserves to fully cover all known current and future
liabilities and some counties choose a position between these two.
The Board of Supervisors should be involved in deciding the level of reserves for each of these
funds. To inform this decision, the budget document should include information in a table such
as presented in the example in Exhibit 4.2:
The County's financial statement for the fiscal year ending June 30, 2001 showed that the Risk
Management fund had approximately $ 12.9 million in cash reserves for future costs. The liability
for noncurrent insurance payments was reported in the financial statement as $ 11.9 million. In
other words, there was enough cash in the fund to cover all known and projected pay outs for the
current and future years that would have to be paid if the County suddenly went out of business
and never received any more payments from its customer County departments. Since the
likelihood of the County actually going out of business is quite small, the Board may want to
consider a lesser reserve level. By presenting the projected pay outs for future years in the
proposed budget, the Board would be better informed for deciding the optimal level of reserves.
A summary of information that should be presented is shown in the following two exhibits. The
numbers are for illustration purposes only and do not reflect the actual or projected expenses of
El Dorado County. The information in Exhibit 4.3 would provide a snapshot of retained
earnings, annual revenues, annual costs, and cash reserves on hand for the future and projected
future liabilities, all in one table.
Harvey M. Rose Accountancy Corporation
Confidence level
Reserves
required
000s
Pa as you o None
20% $ 3,000
35% $ 3,500
50% $ 4,000
65% $ 4,500
70% $ 5,000
80% $ 5,500
100% $ 6,000
Exhibit 4.3
Example of cash reserve, revenue and expenditure
information to be presented in the proposed
General Liability and Workers' Compensation Fund budgets
( in 000s)
Note:
Amounts shown are for illustration purposes only and are not actual El Dorado County amounts.
Actual historical expenditures should be shown to provide information about typical annual
expenditures, what is likely to be needed in future years and to help determine how much cash
should be kept in reserve to meet those expenses.
Exhibit 4.4
Example of payment data to be presented in budget
for General Liability and Workers' Compensation Funds ( in 000s)
Section 4: Internal Service Funds
Information such as that shown in Exhibit 4.4 should be presented to the Board of Supervisors to
identify average annual expenditures in the past and as a basis for future projections. The
historical numbers would have to be tied to some sort of appropriate index such as number of
employees to determine an average cost per employee and then project forward based on
expected increases in the County work force. Other variables should also be considered in the
projections such as changes in County services that might result in changes in risk exposures.
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General Workers'
Liability Compensation
a Retained earnings: end of FY 00- 01 $ 2,900 $ 3,600
b Revenues from charges to departments FY 01- 02 3,700 4,200
c Total funds available ( a+ b) 6,600 7,800
• FY 01- 02 Claims pay outs/ legal costs, 2,000 2,600
- FY 01- 02 Third party administrator costs 400 300
FY 01- 02Excess insurance costs 1,500 1,000
FY 01- 02 Staff and administrative costs 150 200
h Total costs FY 01- 02 ( d through g) 4,050 4,100
i Retained earnings: end of FY 01- 02 c- h 2,550 3,700
J Cash reserves on hand 6,600 3,300
k Future Year Liabilities 6,500 4,200
Fiscal Year
General
Liability
Workers'
Compensation
1995- 96 1,500 1,600
1996- 97 1,700 1,500
1997- 98 1,800 1,900
1998- 99 2,000 1,900
1999- 00 2,700 2,500
2000- 01 2,500 2,700
Fleet Management Fund
Section 4: Internal Service Funds
Fleet management fund information in the budget document is less comprehensive than risk
management fund information. The fleet management function is a function of the General
Services Department and is included in that department's budget. Because the department covers
so many functions, such as capital projects, communications, purchasing, airports and parks and
grounds, and because the expenditure level is lower, the level of reporting is lower for fleet
management than risk management.
In spite of its smaller size, similar information should be presented in the budget as discussed for
risk management. The budget document should include cash on reserve ( approximately $ 3.7
million as of June 30, 2001), annual revenues and historical and five year projected fleet
maintenance and replacement costs. Unlike insurance costs, the County would not have future
vehicle maintenance and replacement obligations if it went out of business but some reserve
level is appropriate to cover unanticipated expenses such as replacement of critically needed
vehicles before their expected replacement dates due to accident or unplanned repair costs
exceeding the vehicle's value. This information and reserve options would assist the Board of
Supervisors in making decisions on funding levels and appropriate charges to customer
departments for this fund.
Recommendations
It is recommended that the Board of Supervisors:
R4.1
Adopt a policy establishing reserve levels for the three components of the risk
management fund and the total fleet management fund based on information provided by
the Chief Administrative Officer including: ( a) a year by year schedule of all known and
estimated liabilities for the health benefits, workers' compensation and general liability
funds; and, ( b) the amount needed to fund reserves at alternative confidence levels
ranging from " pay as you go" to fully funded;
R4.2
Require the Chief Administrative Officer to provide details on historical and projected
claims payment expenditures each year in the proposed budget for all internal service
funds, with the three components of the risk management fund presented separately;
R4.3
Require the Chief Administrative Officer to clearly present the amounts in reserve each
year by each internal service fund or component thereof;
R4.4
Require the Chief Administrative Officer to provide more detail on the approximately
$ 17 million in annual Services and Supplies expenditures for the risk management fund
and each of its component funds.
35
Harvey M. Rose Accountancy Corporation
Costs and Benefits
There would be no new direct costs associated with the above recommendations. Benefits would
include better information about internal service fund funding levels provided to the Board of
Supervisors and the public and, potentially, one time funds available for other purposes if the
Board should choose to reduce reserve levels allocated to the funds.
Responses Required for Findings
F4.1 through F4.4
El Dorado County Board of Supervisors
Responses Required for Recommendations
R4.1 through R4.4
El
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Description
| Rating | |
| Title | El Dorado County Grand Jury final report |
| Subject | California. Grand Jury (El Dorado County)--Periodicals.; El Dorado County (Calif.)--Politics and government. |
| Description | Description based on: 2003/2004 ; title from cover.; Harvested from the web on 2/1/07 |
| Creator | California. Grand Jury (El Dorado County) |
| Publisher | El Dorado County Grand Jury] |
| Type | Text |
| Identifier | http://digitalarchive.oclc.org/request?id%3Doclcnum%3A144544458; http://www.co.el-dorado.ca.us/grandjury/index.html |
| Language | eng |
| Relation | http://worldcat.org/oclc/144544458/viewonline |
| Format-Extent | 1 web site : digital, HTML, PDF files. |
| Relation-Requires | System requirements: Adobe Acrobat Reader.; Mode of access: Internet. |
| Transcript | FOREWARD Just what is the Grand Jury, who are its members, and what are their functions? William J. Shaw and Noah Weinstein in their article, Grand Jury Reports – A Safeguard of Democracy, describe a Grand Jury as “ a short- lived, representative, non- political body of citizens functioning without hope of personal aggrandizement. It [ the Grand Jury] comes from the citizens at large and soon disappears into anonymity without individual recognition or personal reward.” In El Dorado County this is a group of 19 citizens who have the ability, time and willingness to serve the citizens of the County for a period of one year. The requirements for service are basic and designed to allow and encourage maximum participation by the County’s citizens. A juror must be 18 years old, a United States citizen, and a resident of El Dorado County for at least one- year on the date they are sworn to service. The candidate for juror must also possess natural faculties of ordinary intelligence, sound judgment, and fair character. Service on the Grand Jury is an act of citizenship. Individuals selected for the Grand Jury should expect to work a minimum of three six- hour days per week throughout their year of service. Remuneration for service was paid at the rate of $ 10.00 per day, however, effective July 1, 2002 will be paid $ 15.00 for those days actually worked. Mileage driven for grand jury business is currently reimbursed at the rate paid to all county employees. The Grand Jury essentially serves as the agency of civilian oversight for our local government. The common public perception of the Grand Jury is a body taking testimony and handing down Criminal Indictments. In reality, the principal functions of the Grand Jury are civil in nature. Some duties, such as the inspections of public prisons, are required by law to be performed on a yearly basis. The majority of the Grand Jury’s inquiries, however, are the result of its own internal direction. Generally, the Grand Jury audits local government processes, expenditures, and the actions of its officials. Practically speaking, a grand jury primarily responds to complaints brought to it by citizens of the County, to issues of concern and public debate as publicized in the local media, and to other issues exposed during the investigation of complaints. During the course of its inquiries, members of the Grand Jury not only will find conditions and practices within government that deserve recommendations for improvement, they also will encounter examples of excellent service performed by units or persons in local government. Grand Juries by their very design are intended to identify and recommend improvement of deficiencies within government; as such, reports of the Grand Jury tend to be viewed as negative in nature. It would be unfair, however, for the Report of the Grand Jury to focus on the negative without recognizing outstanding performance within government. In that light, this Report also contains commendations for those persons, encountered by members of the Grand Jury, who were noted to have performed exemplary service for the County. i At the conclusion of its investigations the Grand Jury may issue an indictment, an accusation, and/ or a report. The year- end Report of the Grand Jury is a compilation of investigative reports complete with recommendations for change that are intended to improve the operations of government and so better serve the citizens of this County. Grand Juries have no power to impose their recommendations on local government. Grand Juries cannot enforce their recommendations; they merely have the ability to “ shine a light” on the facts uncovered by their inquiries, thus bringing matters to the public’s attention. The Report then provides a vehicle for public debate. It is a matter for the public to decide whether the recommendations of the Grand Jury are appropriate, and whether actions taken by government officials in response to those recommendations are themselves appropriate. Ultimately, the citizens of the County carry out their role in this process, by expressing their judgment on the issues at the ballot box. Michael Day, Foreman 2001/ 2002 Grand Jury To Obtain an Application Any interested citizen who meets the required qualifications and is able to make the time commitment may request an application for appointment to the Grand Jury from the Staff Court Secretary at the following location: Superior Courthouse 495 Main Street Placerville, California 95667 ( 530) 621- 6451 ii TABLE OF CONTENTS PAGE FOREWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii EL DORADO COUNTY GRAND JURY Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi LETTER TO THE JUDGE FROM FOREMAN . . . . . . . . . . . . . . . vii JUDGE’S LETTER TO THE GRAND JURY . . . . . . . . . . . . . . . . . . viii EL DORADO COUNTY GRAND JURY Supervising Judge & Staff Secretary Picture . . . . . . . . . . . . . . . . . . . . . . . . . . . ix 2001/ 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x Group Picture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi CITIZENS’ COMPLAINTS INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . xii AUDIT & FINANCE Confirming Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Fixed Assets Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Independent Management Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Exhibit – Harvey Rose Accountancy Audit CRIMINAL JUSTICE COMMITTEE Allegations of Violation of Ethics in Government Act . . . . . . . . . . . . . . . . . . . . 7 Citizen Complaint # 01/ 02- C- 025 Allegations Regarding the 2002 Sheriff’s Election . . . . . . . . . . . . . . . . . . . . . . . . 11 Citizen Complaints # 01/ 02- C- 027 and # 01/ 02- C- 035 El Dorado County Jail, Placerville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 El Dorado County Jail, South Lake Tahoe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 El Dorado County Juvenile Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Growlersberg Conservation Camp, Georgetown . . . . . . . . . . . . . . . . . . . . . . . . 28 iii EDUCATION COMMITTEE Golden Ridge School, Juvenile Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Central Sierra Regional Occupational Program . . . . . . . . . . . . . . . . . . . . . . . . . 34 Citizen Complaint # 01/ 02- C- 006 GOVERNMENT & ADMINISTRATION COMMITTEE Introduction ( All Subcommittees) Final Reports - Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Subcommittee on General Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Subcommittee on Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Subcommittee on Government Structure Procedures for the Board of Supervisors in Responding to Grand Jury Final Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Communication of Board of Supervisors’ Directives . . . . . . . . . . . . . . . . . . . . . . 89 Report Replying to Responses Report Replying to Responses of Board of Supervisors to Dated Final Reports of October 4, 2001, October 10, 2001, January 16, 2002 and January 23, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Exhibit – Response to Report Dated October 4, 2001 Exhibit – Response to Report Dated January 16, 2002 Exhibit – Response to Report Dated January 23, 2002 Exhibit – Report Dated October 10, 2001 MENTAL HEALTH COMMITTEE Department of Mental Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 PUBLIC SCHOOL BUILDINGS & GROUNDS COMMITTEE Inspection of Public Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 SOCIAL SERVICES COMMITTEE Department of Social Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Independent Management Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Exhibit – Harvey Rose Accountancy Audit iv SPECIAL DISTRICTS COMMITTEE Cameron Estates Community Services District . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Citizen Complaint # 01/ 02- C- 003 Golden West Community Services District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Citizen Complaints # 01/ 02- C- 020 and # 01/ 02- C- 024 APPENDIX A Instructions to Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 v EL DORADO COUNTY GRAND JURY 2001- 2002 RESOLUTION WHEREAS, the EL DORADO COUNTY GRAND JURY has conducted investigations and has arrived at certain findings and recommendations; and WHEREAS, the EL DORADO COUNTY GRAND JURY desires to make its final report thereon; RESOLVED, by the EL DORADO COUNTY GRAND JURY that the attached report be, and hereby is, adopted as the final report and conclusions of the EL DORADO COUNTY GRAND JURY, 2001/ 2002. PASSED AND ADOPTED at the meeting of the EL DORADO COUNTY GRAND JURY this twelfth day of June, Two Thousand and Two. MICHAEL DAY Foreman vi EL DORADO COUNTY GRAND JURY P. O. Box 472 Placerville, CA 95667 June 2002 Honorable Eddie T. Keller Grand Jury Supervising Judge Superior Court of El Dorado County 495 Main Street Placerville, CA 95667 Dear Judge Keller: I am pleased and honored to submit, to you, the Final Report of the 2001/ 2002 El Dorado County Grand Jury. The nineteen members of this Grand Jury have worked long and hard hours to compile this report. We, as panel members, spent considerable effort and energy in the pursuit of satisfying and surpassing our legal and moral obligation. The Grand Jury was comprised of volunteer citizens of our county who chose to donate a substantial portion of this past year ( July 1, 2001- June 30, 2002) to the residents of El Dorado County for the betterment of local government. It was a learning process for us all. Our service was, at times, exhausting and fatiguing and at other times it tested our level of patience. It was at all times, however, rewarding and exhilarating. Our various backgrounds, expertise and personalities melded into a common bond, which allowed us to seek and achieve our goals for the year. This report reflects the major investigations undertaken by this Grand Jury. It does not, however, consider the entire scope of work and effort put forth by this panel. Many hours were devoted to investigation, research and testimony of other available remedies, insufficient evidence, existing or pending litigation, etc. As Foreman of the 2001/ 2002 Grand Jury, I am thankful and grateful to have served the citizens of El Dorado County. I especially enjoyed the privilege of serving with eighteen extremely dedicated and devoted members of this panel. They are now my friends! Sincerely, Michael Day, Foreman 2001/ 2002 El Dorado County Grand Jury vii THE SUPERIOR COURT STATE OF CALIFORNIA COUNTY OF El DORADO 495 MAIN STREET PLACERVILLE, CA 95667 June 2002 Dear Grand Jury Members: It has been my personal pleasure to have served as your Supervising Judge during the 2001/ 2002 term of the Grand Jury. I hope that my efforts on your behalf have been of service to you. All the judges in this county appreciate the dedication of good citizens like yourselves. You have spent countless hours examining the operation of local government in order to make it better. The investigations that you have conducted and the reports that you have issued cover a wide range of topics, demonstrate keen insights, and offer helpful suggestions for improvements. Your efforts reaffirm the vital democratic principles that government must be open to public scrutiny and effectively serve the interests of its citizens. I wish to express deep appreciation to Mr. Michael day, the Foreperson of this year’s Grand Jury. I have had frequent contact with him during the year and enjoyed working with him. He has outstanding leadership abilities and has worked tirelessly to accomplish the objectives of the Grand Jury. Well done, Michael! Sincerely, EDDIE T. KELLER Judge of the Superior Court ETK: hw viii PICTURE ix EL DORADO COUNTY GRAND JURY 2001/ 2002 Honorable Eddie T. Keller, Supervising Judge Bobbi Arkus Hank Barbachano Jane Marie Black Steve Carlson, Sergeant- at- Arms Michael Day, Foreman Bob Doran Jim Estelle Dick Flachbart Jane Fraim, Recording Secretary JoAnn Hamiel Tim Howell Bob Isaacs Patricia Kriz DeLisa Nelson Dick Nichols Scott Nielsen, Pro Tempore Barbara Palm Mel Sheets Norma Woodward x CITIZENS’ COMPLAINTS ElDorado County Grand Jury 2001/ 2 001 Citizen’s Complaints CASE NO. SUBJECT Disposition Comments DATE 01/ 02- 0- 001 Voter Registration Irregularities Bldg. Dept. No Action Finding 6/ 29/ 01 in Litigation 01/ 02- 0- 002 Sheriffs Dept. Criminal Justice Closed 7/ 18/ 01 ( Deferred) 01/ 02- 0- 003 Cameron Park Estates Cam. Dist. Special Districts See Report 7/ 18/ 01 ( Deferred) 01/ 02- 0- 004 DA’s Office/ Chili Bar Put- in Criminal Justice Closed 7/ 18/ 01 ( Deferred) 01/ 02- 0- 005 General Services Gov/ Admin Closed 7/ 18/ 01 ( Deferred) 01/ 02- 0- 006 El Dorado High School District Education See Report 7/ 18/ 01 ( Deferred) 01/ 02- 0- 007 County Registrar- of Voters Gov/ Admin Closed 7/ 18/ 01 ( Deferred) 01/ 02- 0- 008 Placerville Police Dept. Criminal Justice Closed 7/ 18/ 01 ( Deferred) No Action Finding 01/ 02- 0- 009 El Dorado Hills Comm. Services Special Districts Closed 7/ 18/ 01 ( Deferred) No Action Finding 01/ 02- 0- 010 El Dorado High School District Education No Action Finding: 7/ 18/ 01 ( Deferred) Tennis Courts Allegations Resolved 01/ 02- C- Oil Sheriffs Dept. Dedicated Funds Audit & Finance Closed 7/ 18/ 01 ( Deferred) No Action Finding 01/ 02- 0- 012 Logan Building Gov’t/ Admin Closed 7/ 18/ 01 ( Deferred) No Action Finding 01/ 02- 0- 013 $ 85,000/ Asst. Sheriff Criminal Justice Closed 7/ 18/ 01 ( Deferred) No Action Finding xii El Dorado County Grand Jury 2001/ 2001 Citizen’s Complaints CASE NO. SUBJECT Disposition Comments DATE 01/ 02- C- 014 Out of State expenses, patrols, etc. Criminal Justice Closed 7/ 18/ 01 No Action Finding 01/ 02- C- 015 Injured unloading truck Criminal Justice Closed 7/ 18/ 01 Insufficient evidence 01/ 02- C- 016 Disabled Student Budget/ SELPA Education Closed 7/ 25/ 01 No Action Finding 01/ 02- C- 017 Road/ Easement Problem Building - DOT Closed 7/ 25/ 01 No Action Finding 01/ 02- C- 018 Mental Health Care Deficiencies Social Service See Report 8/ 9/ 01 01/ 02- C- 019 Unjust Termination/ DSS Alleges State Law Violations Alleges State Law Violations Social Service See Report 8/ 29/ 01 01/ 02- C- 020 Special Districts See Report 9/ 19/ 01 01/ 02- C- 021 Special Districts Closed 9/ 19/ 01 No Action Taken 01/ 02- C- 022 Misconduct toward Social Workers Social Services Closed 9/ 26/ 01 Lack of Jurisdiction 01/ 02- C- 023 Misconduct of District Attorney Criminal Justice Just a Letter, No Formal 10/ 24/ 0 1 Complaint 01/ 02- C- 024 Brown Act and other Violations Special Distrist See Report 11/ 6/ 01 01/ 02- C- 025 Bullet Proof Vests for Police dogs in exchange for two firearms Work Rules Violations/ CPS Criminal Justice See Report 11/ 28/ 0 1 01/ 02- C- 026 DSS See Report 12/ 5/ 01 01/ 02- C- 027 Campaign irregularities against Under Sheriff Neves’ Sheriff Run Criminal Justice See Report 12/ 12/ 0 1 01/ 02- C- 028 Tahoe Keyes Property Owners Association misappropriation Special Districts Closed 1/ 16/ 02. 1/ 2/ 02 Not in our Jurisdiction of funds xiii ElDorado County Grand Jury 2001/ 2001 Citizen’s Complaints CASE NO. SUBJECT Disposition Comments DATE 01/ 02- C- 029 Irregularities in Building Dept. Building Comm Closed 3/ 17, 2002 1/ 9/ 02 Lighting Unlimited Other remedies Available 01/ 02- C- 030 Georgetown Public Utilites District Audit & Finance Deferred to Next 1/ 23/ 02 01/ 02- C- 031 Placerville Union School District Education Grand Jury 3/ 6/ 02 Closed 2/ 20/ 02 1/ 23/ 02 Other Remedies 01/ 02- C- 032 SLT/ Inequality of services to mental Social Service See Report 1/ 29/ 02 health clients 01/ 02- C- 033 SLT/ Abuses of Ordinance 4476 by Building Comm Deferred to Next 1/ 29/ 02 local builders Grand Jury 3/ 6/ 02 01/ 02- C- 034 SLT/ lrregularities in DA’s office Criminal Justice Deferred to Next 1/ 29/ 02 Grand Jury 3/ 6/ 02 01/ 02- C- 035 Campaign Irregularities against Criminal Justice See Report 1/ 29/ 02 Sgt. Hennick’s Sheriff run 01/ 02- C- 036 County Counsel/ Public Records Act Audit & Finance Deferred to Next 2/ 13/ 02 Grand Jury 3/ 6/ 02 01/ 02- C- 037 Fitness for work/ HRD G& A, Personnel Deferred to Next 2/ 27/ 02 Subcommittee Grand Jury 3/ 6/ 02 Closed 3/ 6/ 02 01/ 02- C- 038 Sheriffs Office/ Firearms Seizure Criminal 2/ 27/ 02 Justice Other Remedies 01/ 02- C- 039 Superior Court/ Family Law Criminal Justice Closed 3/ 13/ 02 3/ 13/ 02 Lack of Jurisdiction 01/ 02- C- 040 Process of Flu shots Administration Health/ Soc Serv Deferred to 2002/ 2003 3/ 13/ 02 Health Department Grand Jury 01/ 02- C- 041 Tahoe Manor Health/ Soc Serv See Report 3/ 20/ 02 01/ 02- C- 042 Mental Health/ SLT Clinic Health/ Soc Serv See Report 3/ 20/ 02 xiv El Dorado County Grand Jury 2001/ 2001 Citizen’s Complaints CASE NO. SUBJECT Disposition Comments DATE 01/ 02- C- 043 Tahoe Manor Health/ Soc Serv See Report 3/ 20/ 02 01/ 02- C- 044 Tahoe Manor Health/ Soc Serv No Jurisdiction 3/ 20/ 02 01/ 02- C- 045 Uncollected property taxes/ SLT G& A Deferred to 2002/ 2003 3/ 20/ 02 Grand Jury 01/ 02- C- 046 DSS Director Selection Process Health/ Soc Serv Deferred to 2002/ 2003 4/ 3/ 02 Hiring Practices Grand Jury 01/ 02- C- 047 Fairplay Cemetery Ownership G& A Deferred to 2002/ 2003 4/ 3/ 02 Grand Jury 01/ 02- C- 048 Barton Hospital Health/ SS See Report 2/ 6/ 02 01/ 02- C- 049 Tahoe Opportunity Project Health/ SS See Report 2/ 6/ 02 01/ 02- C- 050 Tahoe Manor Health/ SS See Report 2/ 6/ 02 01/ 02- C- 051 Mental Health/ SLT Health/ SS See Report 2/ 6/ 02 01/ 02- C- 052 Questionable Practices of Placerville Audit & Finance Deferred to 2002/ 2003 4/ 17/ 02 Controller Grand Jury xv AUDIT AND FINANCE COMMITTEE Confirming Purchase Orders Reason for the Report During the course of its other investigations, the Audit and Finance Committee of the 2001/ 2002 Grand Jury heard several comments concerning the purchasing practices throughout the County, such as lack of pre- approval and circumvention of existing County purchasing contracts. Based on these comments, the Audit and Finance Committee investigated established policy ( Purchasing Ordinance) and actual purchasing practices within the County. Scope of the Investigation The following documents were reviewed: • County Ordinance Code pertaining to Purchasing Procedures; • General Services Department documentation; • County final budgets for the Fiscal Year 2001/ 2002; and • Past Grand Jury reports. The following persons were interviewed: • Interim Chief Administration Officer; • County Auditor/ Controller; • Interim Director of General Services; and • Three employees from General Services. Findings F1: Chapter 3.12 of the El Dorado County Charter documents Purchasing Procedures and is known as the County Purchasing Ordinance. This section of the County Charter provides in part: “ 3.12.020: The purpose of this chapter is to secure for the county taxpayers the advantages and economies which will result from centralized control over the purchase of supplies, materials, equipment and contractual services resulting from the application of modern, businesslike methods relative to government expenditures for such purchases. Further, this chapter is to adopt policies and procedures governing the purchase of supplies, 1 equipment and contractual services by the county in accordance with the Government Code, section 54201 et seq. 3.12.060: The purchasing agent may, and where legally required to do so, shall, authorize in writing any county department to purchase renewable types of office supplies and materials in total amounts of four hundred ninety- nine and 99/ 100 dollars ($ 499.99) or less, utilizing the ‘ direct’ purchase order form, independently of the county purchasing agent’s office; but such purchases shall be made in conformity with the applicable procedures. The purchasing agent may also rescind the authorization to purchase independently, by written notice to the county department unless otherwise prohibited by law. 3.12.070 A. Only department heads or their designated representatives may approve and sign direct purchase orders in total amounts of four hundred ninety- nine and 99/ 100 dollars ($ 499.99) or less. Department heads may delegate such authority by filing a written authorization therefor with the purchasing agent and the auditor- controller. … C. All departments shall strictly adhere to written purchasing procedures as they may be issued or amended from time to time by the purchasing agent or the board of supervisors.” F2: The General Services Department in conjunction with the Information Services Department developed a tracking system to report the number and percentage of confirming purchase orders. Confirming or “ after the fact” purchase orders are not acceptable and are a violation of County Purchasing Ordinance requirements. The data reflects purchase orders issued between $ 0 - $ 10,000.00. Data was not extracted for purchases exceeding $ 10,000.00 since the competitive bidding threshold is established at $ 10,000.00 by ordinance. The data does not include the issuance of blanket purchase order purchasing activity, but rather independent purchase orders that were requisitioned by departments as confirming. Following are the results of this tracking system: Reporting Period Ending Total Purchase Total Confirming Percentage Fiscal Year 2000- 2001 $ 14,716 $ 10,955 74% September 30, 2001 2,544 1,901 75% December 31, 2001 4,043 2,997 74% March 31, 2002 4,552 3,070 67% F3: Purchase orders are sometimes “ split” in order to circumvent required signature authority. For example, while a $ 15,000 purchase requires competitive bidding, two $ 7,500 purchases would not. This is an unacceptable practice. 2 F4: There is no system in place to hold department heads accountable for failing to adhere to County Purchasing Ordinance Requirements. F5: Purchasing practices that do not adhere to the County Purchasing Ordinance subject the County to risks of overspending and poor budget management. Recommendations R1: All department heads must be held accountable for adhering to the County Purchasing Ordinance. Directors of departments ordering supplies and services without an appropriate purchase order or contract in advance of those orders should be required to appear before the Board of Supervisors, explain the reason( s) for such noncompliance, and obtain express approval for the unauthorized acquisitions. R2: Each department head should develop a system to hold subordinates exercising purchasing authority accountable for noncompliance with the County Purchasing Ordinance. R3: The County Purchasing Ordinance should be amended to expressly prohibit the “ splitting” of purchase orders. Responses Required for Findings F2 through F5 El Dorado County Board of Supervisors Responses Required for Recommendations R1 through R3 El Dorado County Board of Supervisors 3 AUDIT AND FINANCE COMMITTEE Fixed Assets Report Reason for the Report The Grand Jury elected to inquire into whether the various departments of El Dorado County government are maintaining accurate records and/ or inventory of equipment and fixed assets. This inquiry did not address the issue of record keeping in regard to disposal of assets by the County. The inquiry occurred as a result of ( 1) observation of discarded items in an alleyway behind the Government Center and ( 2) testimony taken by the Grand Jury. Scope of the Investigation • Interview with the County Auditor/ Controller; • A review of the County’s Fixed Asset Inventory System - Property Inventory By Department (“ Inventory Report”); and • A random physical audit by the Grand Jury. Findings F1: On September 5, 2001, miscellaneous property was observed in an unsecured alley behind County Administration Building B, adjacent to the Department of Veterans Services. The items appeared to be surplus and/ or discarded equipment, including computer and radio equipment, shelving, bins and old furniture. The items remained in this area for several weeks. F2: The existence and location of County assets is memorialized in the Inventory Report and listed by department only. The format of the report is not designed to contain information as to precise physical locations. F3: Departments selected for the random audit were, at best, only able to locate inventory assets noted in the Inventory Report by reference to individual memory or hand-written notes on the Report. F4: One audited department, with several locations, had particular problems locating items of inventory listed on the Inventory Report, which were housed at outlying department locations. F5: The software program that produces the Inventory Report is not adequate to maintain complete records of fixed assets and inventory. The software does not allow 4 departments to keep accurate records of items being surplused out of the departments or relocated within the departments. F6: Departments audited by the Grand Jury do not have independent computer systems for tracking fixed assets or inventory within their individual departments. Recommendations R1: All equipment being surplused should be properly placed in a secured facility. Those items should not be allowed to accumulate in unsecured areas. R2: The Department of Information Services, in conjunction with the user departments, should design and establish standardized procedures for the surplusing, locating, and relocating or discarding of equipment. R3: The existing Inventory Report program should be modified, or a new computer program designed, to provide for systematic notations useful to individual departments in maintaining accurate and up- to- date fixed assets and inventory records. Commendations The Grand Jury commends county personnel for their creative means of maintaining records as best they can with what they have available. The Grand Jury was impressed by the fact that an employee in the Tax Collector’s Office, from memory, could take the investigating members immediately to each item indicated on the Inventory Report. Responses Required for Findings F1 through F6 El Dorado County Board of Supervisors Responses Required for Recommendations R1 through R3 El Dorado County Board of Supervisors 5 AUDIT & FINANCE COMMITTEE Independent Management Audit During the course of its investigations, the 2001/ 2002 El Dorado County Grand Jury concluded that there were several aspects of county government that deserved a more in-depth investigation than the Grand Jury was equipped to undertake. Accordingly, with financing approved by the Board of Supervisors ( Board), the Grand Jury retained the Harvey M. Rose Accountancy Corporation ( HMRAC) to investigate and report on issues as directed by the Grand Jury. One of these issues was a review of the County’s budget process ( Budget Process). The HMRAC report on the Budget Process is contained in its entirety within the Audit & Finance Committee section of the 2001/ 2002 Grand Jury’s Final Report. The Grand Jury carefully reviewed and considered both the factual findings and the recommendations contained therein, unanimously concurs with those findings and recommendations, and adopts them as its own. Responses Required for All HMRAC Findings El Dorado County Board of Supervisors Responses Required for All HMRAC Recommendations El Dorado County Board of Supervisors Commendation The Grand Jury commends the Board of Supervisors for its willingness to authorize and fund the Grand Jury’s independent Budget Process audit. The Board’s willingness to engage in and to permit such analysis and potential self- criticism evidences a high degree of civic responsibility, to the benefit of the people of El Dorado County. 6 Analysis of El Dorado County's Budget Process Prepared for the FY 2001- 02 Grand Jury County of El Dorado By the Harvey M. Rose Accountancy Corporation May 2002 Harvey M. Rose Accountancy Corporation 1390 Market Street, Suite 1025, San Francisco, CA 94102 ( 415) 552- 9292 • FAX ( 415) 252- 0461 North Hollywood, CA ( 818) 503- 7191 Mr. Michael Day, Foreperson Members of the FY 2001- 02 El Dorado County Grand Jury P. O. Box 472 Placerville, CA 95662 May 10, 2002 Dear Foreperson Day and Members of the FY 2001- 02 El Dorado County Grand Jury: The Harvey M. Rose Accountancy Corporation is pleased to submit this Analysis of El Dorado County's Budget Process. This report contains details of our review of the budget process, fourteen findings identifying areas that could be improved in the process and eighteen recommendations specifically identifying how these improvements should be achieved. The four areas of findings and recommendations pertain to the need for a countywide strategic plan and goals and objectives to guide the budget process, capital project management and reporting in the budget and throughout the year, budget timing, information and analysis, and internal service fund budgeting and reporting. Thank you for choosing the Harvey M. Rose Accountancy Corporation to conduct this analysis. We are available at any time to respond to any questions about this report. www harvr? vrnsa nnm Sincerely, Frdd Brousseau Project Manager Table of Contents Section Page Introduction ................................................................................................... i 1. Long Range Strategic Planning and the Budget........................................... 1 2. Capital Projects........................................................................................... 10 3. Budget Timing, Information and Analysis................................................. 22 4. Internal Service Funds ................................................................................ 29 Introduction Purpose and Methods The FY 2001- 02 El Dorado County Grand Jury retained the Harvey M. Rose Accountancy Corporation to conduct a review of the County's budget process. The objectives of the review were to review the process and its key milestones to determine: • if the finally adopted budget reflects policies, goals and objectives established by the Board of Supervisors; • if the process of creating the budget is efficient and involves sufficient analysis to identify the most cost- effective use of resources; • if the process establishes management accountability; and • if information provided to the Board of Supervisors at budget time and throughout the year facilitates rational budgetary decision- making. To accomplish this, the following methods were employed. Interviews were conducted with key parties involved in the process including each member of the Board of Supervisors, the Interim Chief Administrative Officer, the Auditor- Controller and selected department heads and budget officers. Numerous budget- related documents were reviewed including: • the County budget instructions for FY 2001- 02 and 2002- 03 prepared by the Chief Administrative Office • the proposed FY 2001- 02 budget and workplan document • Budget Addenda documents for FY 2001- 02 • the final budgets for FY 2001- 02, Mid- Year Budget Status Reports and presentation materials presented to the Board of Supervisors for FY 2000- 01 and 2001- 02 • the independently prepared financial statements for the County for FY 2000- 01 ( the most recent year available while this project was underway) • various budget related documents including budget request forms and ad hoc reports available from the county's financial information systems • capital project monitoring documents used by the General Services and Transportation departments County procedures were compared to State law and regulations governing the budget process and comparisons were made to practices in selected other counties. The review was conducted between March and April 2002. Overview of County budget For FY 2001- 02 El Dorado County has budgeted $ 250,073,563 in revenues and uses. On the expenditure side, this consists of $ 246,321,223 in specific budgeted costs for the various County departments and $ 3,752,340 in appropriated contingencies. On the revenue side, the $ 250 million is comprised of 11 sources such as property taxes, licenses Harvey M. Rose Accountancy Corporation Introduction and permits, intergovernmental revenue and carryover funds from the previous year ( fund balance). Exhibit 1.1 shows budgeted revenues of $ 220,669,990 for FY 2001- 02, by source. The difference between the $ 220,669,990 shown and the total $ 250,073,563 in budgeted revenues is $ 29,403,573 in fund balance carried forward from FY 2000- 01. Exhibit 1.1 Budgeted Revenues for FY 2001- 02 El Dorado County Source Amount % Total Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller As shown in Exhibit 1.1, the State is the primary source of revenue for the County. Following that are property and other taxes, charges for services ( development impact fees, planning and building fees, mental health service fees, and others), and Federal funds. Exhibit 1.2 shows budgeted expenditures for FY 2001- 02, by function. As can be seen in the table, public protection comprises the largest share of the County's budgeted expenditures with general government and public ways and facilities second and third in magnitude. The County's contingency appropriation of $ 3,752,340 is also shown. This contingency amounts to 2.4 percent of total budgeted General Fund expenditures. Harvey M. Rose Accountancy Corporation Current Secured Property Taxes $ 32,054,017 14.5% Current Unsecured Property Taxes 899,767 0.4% Other Taxes 13,354,928 6.1% Total Taxes 46,308,712 21.0% Licenses and Permits 7,755,097 3.5% Fines, Forfeitures and Penalties 2,423,749 1.1 Use of Money & Property 1,847,731 0.8% Intergovernmental Revenue: State 70,983,076 32.2% Federal 28,777,865 13.0% Other 500,559 0.2% Charges for Services 42,833,880 19.4% Miscellaneous Revenues 2,386,600 1.1% Other Financing Sources 16,852,721 7.6% Residual Equity Transfers - Total $ 220,669,990 100.0% Exhibit 1.2 Budgeted Expenditures for FY 2001- 02, by Function El Dorado County Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller Another way of viewing the County's budget is by fund, as presented in Exhibit 1.3. The table shows that most of the County budget is comprised of the General Fund and the Roads- Transportation Fund ( 80.2 percent of the total budget). All funds except the General Fund are restricted legally to certain purposes. The Board of Supervisors has discretion over the uses of the General Fund only. The Board has authority over the amounts appropriated for various uses such as salaries, professional services, supplies, etc within the other funds, but only for the purpose for which the fund is legally designated. General Fund monies on the other hand can be appropriated to any department or for any purpose within the County structure. Exhibit 1.3 Budgeted FY 2001- 02 Expenditures and Revenues by Fund, El Dorado County Source: Final Budgets for FY 2001- 02; El Dorado County Auditor- Controller Introduction Harvey M. Rose Accountancy Corporation Function Amount % Total General Government $ 60,467,389 24.2% Public Protection 67,826,132 27.1% Public Ways and Facilities 44,005,027 17.6% Health and Sanitation 31,695,872 12.7% Public Assistance 39,033,680 15.6% Education 2,398,404 1.0% Recreation & Cultural Services 894,719 0.4% TOTAL $ 246,321,223 - Contingency Appropriation $ 3,752,340 1.5% TOTAL BUDGETED $ 250,073,563 100.0% Fund General Amount $ 157,249,680 % Total 62.9% Roads- Transportation 41,367,152 16.5% Health Department 19,719,350 7.9% Mental Health Services 10,463,260 4.2% Community Services 8,026,027 3.2% Accumulated Capital Outlay 5,403,519 2.2% Erosion Control 4,413,840 1.8% County Road District Fund 2,617,875 1.0% Tobacco Settlement 487,860 0.2% Planning: EIR Development Fees 300,000 0.1% Special Aviation 20,000 0.008% Fish and Game 5,000 0.002% TOTAL $ 250,073,563 100.0% Introduction It should be noted that a significant portion of the General Fund is actually used to match State, federal and other external funding so the Board does not actually have full discretion over all of General Fund monies. As in all counties, much of the El Dorado County budget process is governed by State law and regulations and follows a sequence of events for the most part repeated each year. The California Government Code contains a number of deadlines that govern the County's budget process and timetable. Highlights of these requirements include the following: Estimates of revenues and expenditures are to be provided to the County's auditor or administrative officer by June 10 of each year ( § 29040) A tabulated version of the estimated revenues and expenditures, or a budget, is to be provided to the Board of Supervisors by June 30 of each year ( § 29062) The Board of Supervisors shall act on the budget by July 20 of each year ( § 29063) Copies of the budget shall be prepared and made available to the public by August 10 of each year ( § 29065) The Board of Supervisors shall notice the public on or before August 10 of each year of public hearings on the proposed budget ( § 29066) On or before August 20 of each year public budget hearings must commence. ( § 29080) The budget must be adopted by the Board of Supervisors by August 30 of each year ( § 29088) Unfortunately, these timing requirements do not coincide with the State budget cycle so some budget decisions have to be prepared without benefit of the finally adopted State budget. El Dorado County has designed its budget process to enable it to meet these State mandated deadlines. The County's process includes: Some departments begin preparation of their revenue estimates and program plans starting in the fall Budget instructions prepared by the Chief Administrative Officer are provided to all departments in February Completed department budget requests are provided to the Chief Administrative Officer by April The Auditor- controller prepares estimates of non- departmental revenues in April and May Chief Administrative Office staff reviews the budget requests during April and May The Chief Administrative Officer's proposed budget is transmitted to the Board of Supervisors by June 15 The Board of Supervisors accepts the proposed budget in June iv Harvey M. Rose Accountancy Corporation Budget addenda requests are prepared by departments and submitted to the Chief Administrative Office in early August Budget addenda reports and documents are submitted to the Board of Supervisors in August Budget addenda hearings take place in September Acknowledgments The County's budget documents and midyear reports are very extensive documents, thoughtfully organized and containing much useful information. Preparation of these documents certainly requires a great deal of work by County staff and the Chief Administrator's Office. This process is made more difficult at present because the Interim Chief Administrative Officer's prior position of Assistant Chief Administrative Officer is vacant, temporarily reducing the number of staff positions available for budget analysis and preparation. Preparation of the budget document must take place at the same time as the Chief Administrative Office meets its other ongoing responsibilities. The auditors wish to acknowledge the Interim Chief Administrative Officer who was extremely helpful in the conduct of this review. He was generous with his time and provided numerous budget related documents and reports for review and analysis. Introduction Harvey M. Rose Accountancy Corporation 1. Long Range Strategic Planning and the Budget F1.1 F1.2 F1.3 The County does not have a long range strategic plan with goals and objectives set by the Board of Supervisors to guide the allocation of County funds and resources. Without this, budget and program priorities are set primarily by County staff without the benefit of structured input from elected officials and the public. This has been particularly true in past years when the budget was adopted with very little discussion at the Board of Supervisors public hearings. For the current fiscal year, FY 2001- 02, the Board of Supervisors chose to hold more extensive public hearings as part of the budget addenda process and received detailed presentations from all departments. While these hearings allowed for more interaction between the Board and the departments than has taken place in the recent past, this process would be even more valuable if the budgets submitted by the departments were prepared under policy direction already provided in a long range strategic plan. Another benefit of a strategic plan is providing a common set of goals and objectives for all County employees. As part of a multi- year strategic planning effort, a process for measuring individual department performance and plan outcomes is needed. This would also enhance the budget process by providing the Board of Supervisors with meaningful performance measures for each department and a method for measuring the effectiveness of allocated funds. Many organizations, public and private, engage in a strategic planning process to accomplish the following: 1) confirm and refine the mission statement of the organization with which all employees and stakeholders agree; 2) establish a vision for the future of the organization; 3) develop goals, objectives and action plans to ensure accomplishment of the mission and vision; and 4) establish a mechanism for measuring and reporting on actual organization performance relative to the goals, objectives and action plans. Generally, strategic plans are multi- year in nature with a five year horizon being fairly typical. A strategic planning process for El Dorado County should include the following steps: 0 0 a 0 0 Assessing the current state of County operations including resources available and strengths and weaknesses of the organization Identifying likely future trends that will affect the County ( e. g., population growth in El Dorado and neighboring counties, changes in State funding formulas, likely incorporation of cities, impacts of new technology, etc.) Identifying likely future service needs and resources available to meet those demands ( i. e., likely revenue streams) Establishing service goals and objectives consistent with the mission and vision for the future Establishing a system for measuring the County's success in meeting the stated goals and objectives Harvey M. Rose Accountancy Corporation Section 1: Long Range Strategic Planning and the Budget Currently El Dorado County does not have a long term strategic plan. Some departments such as the Information Services Department have developed plans specific to their departments and programs but there is no overarching plan for the County as a whole. A countywide plan would be valuable for budget purposes as it would help guide the allocation of resources consistent with established goals and objectives. Under the present system, department heads can set goals and objectives for their departments and Board members may provide direction on a case by case basis through budget hearings or other forums where department heads and Board members interact. But there is no formalized process by which the public and the Board as a group reach consensus and establish priorities that provide clear direction to all departments. A multi- year approach helps get around the limitations of the single year budget process that often doesn't address projects and initiatives that span more than one year. Typical multi- year projects in the county include capital projects, service delivery improvements, improvements in administrative activities, computer installations and upgrades, and other initiatives. While final appropriations still have to be made in the annual budget to fund multi- year projects and initiatives, providing directives in a strategic plan will help guide funding decisions in the budget process and will provide direction to department managers about their priorities. The County needs a system to measure department performance Measuring accomplishment of the goals, objectives and action plans in a strategic plan is probably one of the greatest benefits of embarking on such an effort and it is directly linked to the budget process. First, it makes the strategic plan a much more meaningful, results- oriented process. While establishing mission and vision statements, goals and objectives and action plans are all worthwhile activities, they can become meaningless if there isn't a method of measuring and reporting results. Setting an overall goal for the County such as making the County safe from crime is fine, but adding a method for measuring whether or not this occurs gives the process much greater impact. This could be measured in crime rate trends, arrest rates, successful prosecution and sentencings, community perception of safety, and other measures. These type of measures can be tied to the budget process through, for example, reviewing law enforcement officers per capita, arrests resulting in successful prosecutions, response times, and other measures. The budget can be adjusted accordingly to improve these measures to meet the service goals of the strategic plan. For each department, the proposed El Dorado County budget includes a mission statement, workload indicators, written summaries of all major programs, and staffmg information. This is useful information but what is missing are goals and objectives for the department and outcome measures to provide meaning to the workload indicators. The workload indicators, shown for the proposed, current and previous two fiscal years, generally measure caseload but not program outcomes. For example, the Probation Department budget for FY 2001- 02 shows 33 workload indicators for eleven program areas. The program areas include Juvenile Hall, Juvenile placement, Group Homes/ Foster homes, Adult Court, Adult Supervision and others. Workload indicators include measures such as number of court disposition reports, number of intake hearings, average daily population at Juvenile Hall, number of Adult Court reports, number of Harvey M. Rose Accountancy Corporation Section 1: Long Range Strategic Planning and the Budget adult probationers supervised, number of number of felony sentencing reports prepared and others. The problem with the workload indicators in the Probation Department's budget is that none of them allow for an assessment of department outcomes. For example, a common objective for probation departments is to rehabilitate the probationer so they don't commit the same crime again and have subsequent encounters with the criminal justice system. To measure this objective, recidivism rates should be presented in the budget document rather than just the number of probationers supervised by the department. A high recidivism rate might indicate that Probation Department efforts are not succeeding and would lead to discussion about the level of funding for this effort and whether or not it is adequate and if the Department needs to operate its programs differently to achieve greater success. The Probation Department's number of court reports workload indicator also measures work but not outcomes. It is not possible to tell from the numbers alone if the department is doing a good job of producing its reports for court. Two of the most important factors for court reports generally are whether they are delivered to the court timely and whether they contain the information needed by the judiciary to facilitate decision- making. Useful performance measures for this work might include number of reports delivered to the court on time and the results of a survey of the court's satisfaction with the content of the reports. As with the previous example, this type of information would enable a more informed discussion of the appropriateness of funding levels and program management. Having broad countywide goals and objectives in a strategic plan would also help guide departments such as the Probation Department in that their goals, objectives and funding allocations and requests would need to be linked to the countywide goals and objectives. For example, countywide goals and objectives related to the Probation Department might be to improve coordination between all of the County criminal justice agencies and expansion of alternative programs to keep nonviolent offenders out of jail. The Probation Department would need to respond to these goals and objectives by presenting its coordination efforts with other departments, and development or expansion of alternatives to incarceration programs. Another link between the strategic plan and the budget is that the strategic plan should include financial goals and objectives for the County. These could include target reserve levels, target user fee recovery rates, a countywide approach to one- time revenues, approaches to funding levels for internal service funds, policies regarding deficit spending and others. Departmental strategic planning in El Dorado County As mentioned above, El Dorado County's Information Services Department produced a strategic plan in 2000. The plan was prepared in response to a request from the Board of Supervisors and it states that it will be regularly updated. The purposes of the plan are to: anticipate future information processing needs and provide a strategy for meeting those goals; define an optimum sequence of events to achieve the strategy; facilitate common understanding and support for the department's future direction and goals by all key stakeholders ( customers, staff, County management); provide a framework to manage and control the working environment; and, Harvey M. RoseAccountancy Corporation achieve optimum effectiveness and efficiency of resources. Its goals for the future include: expanding basic intranet/ intemet services; sharing and integrating data; providing business support data in multiple formats; providing multi- level integrated computing services; re-engineering business processes; guaranteeing the integrity and availability of County data; and, maintaining adequate and appropriate resources. The Information Services plan and any other department strategic plan in the County should be used as underpinnings to a countywide strategic plan. The countywide plan would provide higher level goals and objectives and individual department plans would be more specific and detailed regarding their particular services. The various individual department plans should be consistent with the countywide plan prepared by the Board of Supervisors. As suggested for the countywide strategic plan, individual department success in meeting the goals and objectives in their plans should be measured on an annual basis. Strategic planning in other jurisdictions As mentioned above, many private and public organizations have prepared and are implementing strategic plans. The public organizations include counties and cities throughout the country. In California, one of the more extensive county strategic plans was prepared in Riverside County. The plan, entitled Strategic Vision 2020, addresses the County's mission and business, vision for the next twenty years and guiding principles, service delivery priorities, service goals and strategies, inter- governmental relations, environmental issues, financial management fundamentals, land use planning principles, and related matters. Since many departments in the county have also prepared strategic plans, the Countywide plan incorporates all of those plans. The Riverside plan addresses limits to County service and highlights what the County cannot do as well as areas where it should excel. Maricopa County, Arizona initiated a strategic planning process in 2000 that integrated planning, budgeting and performance measures. For this effort, each department was required to prepare a strategic plan that included the following: a 0000 Section 1: Long Range Strategic Planning and the Budget The County mission and vision statement A department mission and vision statement' Department goals Identification of department issues Identification of all key programs in each department including: D Program name D Program purpose Key results for the program ( usually a quantifiable measure) Activities and services within each program Outputs for each activity Actual results for each activity compared to key result expectations Cost per output 1 The department vision statement was optional in the Maricopa County plan. Harvey M. Rose Accountancy Corporation Section 1: Long Range Strategic Planning and the Budget Quarterly reports are produced for each department in Maricopa County. A sample report for the Maricopa County Information Systems department is shown as Attachment 1. As can be seen, performance data is not available yet for each key activity in this program. But efforts are now underway to regularly collect this data and to tie it to a cost efficiency factor shown at the end of the attachment. There is a range of approaches for El Dorado County to consider in establishing a strategic planning process but the key elements should include: o statement of purpose or mission; o vision for the future; o goals, objectives and action plans for accomplishing the mission and vision statements; and, o a system for measuring results linked to the budget process. The plan's goals and objectives will also drive the budget process as each department will be expected to show how they are contributing to the strategic plan's goals and objectives through their activities. Recommendations It is recommended that the Board of Supervisors: Rl. 1 Direct the Chief Administrative Officer to implement a strategic planning process for the County to include: an assessment of strengths and weaknesses of the County organization; input from all key stakeholders; a mission statement and vision for the future of the County; goals, objectives and action plans to achieve the mission and vision; and, a system for measuring and reporting the County's success in achieving the goals and objectives; R1.2 Include financial goals, objectives and policies for the County in the recommended strategic plan addressing issues such as target reserve levels, cost recovery targets for County user fees, deficit spending policies and others; R1.3 Direct the Chief Administrative Officer and department heads to develop goals and program objectives for their departments consistent with the countywide goals and objectives developed in the strategic plan; R1.4 Direct the Chief Administrative Officer and department heads to include links in their budgets and funding requests to the strategic plan goals and objectives and to develop and report related performance measures for their departments based on outcomes rather than workload; R1.5 Conduct an annual evaluation and update process where accomplishment of plan goals and objectives is evaluated for the previous year and the plan is updated and revised for the future; Harvey M. Rose Accountancy Corporation R1.6 Incorporate strategic plans developed by individual departments into the countywide plan. Costs and Benefits The primary costs of implementing the above recommendations would be staff time. The County may choose to retain an outside facilitator for some workshops and compilation of information for which there would be direct costs. The benefits of the recommendations would include development of common objectives and direction for all County managers and employees, less time wasted by staff trying to second guess the wishes of the Board of Supervisors, and a system for measuring department performance and methods for linking budget allocations to achievement of agreed upon goals and objectives. Responses Required_ for Findinp_ s F1.1 through F1.3 El Dorado County Board of Supervisors Responses R~ uired for Recommendations Section 1: Long Range Strategic Planning and the Budget Rl. 1 through R1.6 El Dorado County Board of Supervisors Harvey M. Rose Accountancy Corporation NIFR Strategic Planning Results 3 u1 5 Key Results: °,' o Customers Satisfied with Applications Development Service Request Outcome. Activity Name: DESKTOP SUPPORT Activity Purpose: The purpose of the DESKTOP SUPPORT activity is to provide management and support of the entire desktop life cycle to clients so that they can benefit from a stable computing platform. Services that Desktop Upgrades comprise the Hardware Configuration & Pricing Activity: Desktop Virus Protection Distributed Equipment Help Desk Contacts Repaired Equipment Acquired Equipment Desktop Guidance Infrastructure Data Archiving & Recovery Technical Guidance ( Desktop Hardware & Software) Desktop Installations Hardware & Software Inventory Network Server Services Office Automation Tools Personal Data Storage Performance Measures: RESULT: % of Available Server Services ( 24X7) Actuals FY 00: Actuals FY 01: Anticipated FY 02: 98 Mid Yr Forecast: Projected FY 03: Calculation: Data Source: Server logs. from the IT resource. of hours " up" / total number of server hours per quarter. ( NOTE: 90 days in the quarter.) MS Systems Management Server ( SMS), Altiris, Help Desk Tracking software and Internal Activity Leader: Jack Coffin RESULT: % of Available Server Services During Prime Business Hours ( 12X5) Actuals FY 00: Actuals FY 01: Anticipated FY 02: Nlid Yr Forecast: Projected FY 03: Atta chment 1 Page - I off' Program The purpose of the Information Technology Program is to provide IT leadership and Purpose: services to the client departments so that management can obtain maximum benefit 5.2 () 22 1 3 0 1" Qrt Result YTD 1 Comments 1 99.72 2 ( 99.81 99.75 3 4 Qrt Result YTD Comments I 1 100 2 l 100 100 3 4 ` \ IFR Strategic Planning Results 1ut5 Calculation: # of hours " up" / total number of server hours in the quarter. ( NOTE: 60 work days in the quarter.) Data MS Systems Management Server ( SMS), Altiris, Help Desk Tracking software and Internal Source: Server logs. Activity Leader: Jack Coffin OUTPUTS: Number of installed and redeployed desktops Actuals FY 00: Actuals FY 01: Anticipated FY 02: 5600 Mid Yr Forecast: Projected FY 03: Calculation: # of PCs in the installed base + # of replacement and new PCs deployed + : of PCs " waterfalled" within installed base. Data Source: MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software. Activity Leader: Jack Coffin DEMAND: Expected number of installed and redeployed desktops Actuals FY 00: Actuals FY 01: Anticipated FY 02: 5600 Mid Yr Forecast: Projected FY 03: Calculation: -- of PCs in the installed base + t of replacement and new PCs deployed + # of PCs " waterfalled" within installed base. Data Source: MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software. Activity Leader: ' Jack Coffin EFFICIENCY: Cost per installed and redeployed desktop Actuals FY 00: Actuals FY 01: Anticipated FY 02: Mid Yr Forecast: Projected FY 03: Attachment l Page 2 of 3 5.20?: ? 0F Qrt , Result WD Comments 1 1426 2 1527 1 1635 3 4 Qrt I Result YTD Comments 1 1465 2 1587 1, 1682 3 4 NIFR Strategic Planning Results pj i Calculation: Number of installed and redeployed desktops divided by the annual budget of the PC/ LAN Solutions and Support Team. Data MS Systems Management Server ( SMS), Altiris, SupportMagic Call Tracking software and Source: the budget system. Activity Leader: Jack Coffin Attac hment 1 f 3 Qrt Result YTD I Comments 4 2. Capital Projects F2.1 F2.2 F2.3 Using County budget documents it is not possible to determine the status of capital projects or whether the projects are over or under budget. Capital project status reporting in the budget would be improved by including comparisons of originally proposed and actual costs and project timing. Funding and priority setting for El Dorado County's facility and transportation capital projects takes place without benefit of a multi- year capital improvement or facility master plan. As a result, department managers can set project priorities without formalized direction from the Board of Supervisors and the public. These priorities may or may not reflect the highest and best use of limited resources in the opinion of Board members and the public but a method doesn't exist to reach consensus, formalize and update those priorities. Both the General Services and Transportation departments have relatively new directors who have developed project tracking systems that allow for better project status reporting. The Department of Transportation has a five year capital project plan prepared in 1995 but it has never been updated. Staff is currently preparing a new document for review by the Board of Supervisors. With adoption of this plan and a similar one that County management reports is in the planning stages for County facility projects, project priorities will be clearer, the budget process simplified and department accountability for completing projects on time and on schedule improved. There are two primary types of multi- year capital projects in El Dorado County. First are construction and rehabilitation of County facilities such as parks and public buildings that are the responsibility of the General Services Department. Second are road, bridge and transportation system projects that are the responsibility of the Department of Transportation. These projects often span multiple years so their presentation in the budget document is different than presentation of annual operating revenues and expenditures for most departments. County Facility Projects The budget for the General Services Department includes a list of County facility projects categorized as either carryover or new. This list is first presented in the proposed budget submitted to the Board of Supervisors in June and then updated for the budget addenda report in September. Differences between the two lists for FY 2001- 02 are shown in Exhibit 2.1. 10 Harvey M. Rose Accountancy Corporation Exhibit 2.1 Difference in General Services Department Capital Projects between the Proposed and Addenda Budget Documents FY 2001- 02 Proposed Budget Budget Addenda Change # Carryover Projects Carryover Funding # New Projects New Funding 45 72 $ 2,077,786 $ 2,827,090 22 43 $ 1,181,900 $ 2,358,761 27 $ 749,304 21 $ 1,176,861 # Projects Total Funding Total 67 115 48 $ 3,259,686 $ 5,185,851 $ 1,926,165 Source: FY 2001- 02 Proposed Budget & Workplan and Budget Addenda Report Section 2: Capital Projects As can be seen, there is a significant change in the number of projects and funding levels between the two documents. This reflects the timing of the two budget documents. The proposed budget presented to the Board in June has to be submitted to the Chief Administrative Officer by the departments by the end of March/ early April. The September budget addenda information is prepared five to six months later. By then, more construction activity has taken place during the prime construction season and the department has more information regarding which projects will be carried over to the next year. In addition, the original budget submission does not include carryover parks projects at all which added 19 more carryover projects and $ 371,456 in costs to the carryover projects in the budget addenda. With a 59 percent change in funding between the June and September lists, the Board's approval of projects in June is somewhat meaningless. Besides changes between the two lists, it is not possible to tell from either the status of the carryover projects in terms of time or costs. The lists simply present all projects with no indication of whether they are 10 percent or 90 percent done, when project completion is expected, or whether they are under or over budget. The lists are not prioritized so it is not possible to tell the order in which projects will be worked on and completed. While there are many projects in progress and compilation of information on these projects can be complex, a simple report showing the original budget and schedule compared to actual costs and schedule could be readily compiled from Department records with a column for briefly explaining significant variances in time or cost. The Department already maintains a project tracking list for use internally by management. This document could be modified for reporting to the Board and for inclusion in the budget documents. In addition to better reporting of the status of projects, the General Services Department needs a multi- year master plan, approved by the Board of Supervisors, that establishes project priorities and includes estimated funding and timing for each project over a multi- year period such as five years. With agreed upon project priorities, Department management would have clear direction about how to allocate their resources. Project priorities and available funding would also be Harvey M. Rose Accountancy Corporation Section 2: Capital Projects better aligned with such a plan as it would allow for determination of what should be done given limited resources and what cannot be done. New projects could still be added and planned projects deleted after the plan is adopted if priorities change or funding becomes unavailable. The difference would be that the process would be formalized so the Board would have to make a conscious choice to delete a project rather than a project remaining on the list but never getting done. The interim Chief Administrative Officer reports that plans are underway at the time of preparation of this report to commence preparation of such a plan, including financing plans, for County facilities. Department of Transportation Capital Projects and Maintenance Work Transportation capital projects are presented in a different format in the budget than General Services projects. In the FY 2001- 02 budget addenda document, the Department presents a list of approximately $ 24 million worth of capital improvement projects. For each project, a breakdown of project costs ( labor, overhead, fixed assets, etc.) and the project's revenue source( s) are presented. The budget addenda document submitted to the Board of Supervisors in September lists 25 capital projects but does not show the timing or funding status of any of the projects or sequencing or priorities for the coming year ( see Attachment 2). As with the General Services Department budget, information is not presented comparing planned and actual costs and timing of the Department's capital improvement projects. Nor are projects prioritized in accordance with a multi- year plan approved and updated by the Board of Supervisors. A five year roads capital improvement project plan was prepared in 1996 but it has not been updated since according to Department of Transportation management. The Department's planned road maintenance projects are also shown with the same cost breakdown as presented for capital projects and with revenue source( s) identified ( see Attachment 3). Though these projects tend to be single year in scope compared to capital improvement projects, the work to be done such as patching and overlay, chip seal and traffic signal maintenance, is not prioritized by long term County goals such as achieving an average road condition on the County network by a certain date in the future. If specific priorities such as these were established in a multi- year plan, the Department would have a stronger basis to justify the allocation of its maintenance dollars. Like most counties in California, El Dorado County faces extensive deferred maintenance costs in excess of available resources for road and bridge work. Officially adopted agreed upon priorities are all the more important when need exceeds resources available. The Department of Transportation has prioritized its capital improvement projects by three tiers of priority and is in the process of preparing a new multi- year capital improvement plan. The Department is intending to use this document as a budgetary document as well as a work program so that project priorities and resources available will be linked. Department management's goal is to update the plan annually in advance of the April submittal to the Chief Administrative Officer and Board of Supervisors. 1 2 Harvey M. Rose Accountancy Corporation Midyear planning workshops with the Board of Supervisors Section 2: Capital Projects To develop the annual plans and budgets for the two departments' capital improvement plans, a process is needed in advance and in lieu of the budget hearing process in September. By September, or budget adoption time, it is too late to add capital projects which often require a fair amount of advance work to obtain funding or to plan in relation to resources available. With five year plans in place for both departments, workshops should be held with the Board of Supervisors in January or at a more convenient time but well in advance of budget submission and adoption. The purpose of the workshops should be to revise and update the plans in accordance with any changes in circumstances, funding or Board priorities. From that point on, the plan for the next year should be established and budget submission and adoption should reflect the agreements reached at those workshops. This would make for a more clear and streamlined budget process for capital improvement projects as most of the projects and funding levels would have been previously agreed to or modified well in advance of the Board of Supervisors review and approval of the proposed budget. The Department of Transportation does prepare a monthly report on its capital projects but this report does not include a comparison of planned and actual project timing and costs. While this does not need to be provided to the Board and public on a monthly basis, it would be useful to present it at budget time and once more during the year such as at the annual planning workshop discussed above. Similarly, the General Services Department should prepare such a report for Board review twice a year, once at its planning workshop and again at budget addenda submission time. The list of projects included in the proposed budget in June should match that resulting from the January planning workshop and then be updated for the addenda process in September based on actual projects completed during the prime construction period and identification of carryover projects. Recommendations It is recommended that the Board of Supervisors: R2.1 Direct the Director of Transportation to complete its draft five year capital improvement plan now in progress and direct the General Services Director continue with reported efforts to develop such a plan for County facilities. The plans should include proposed priorities for projects, identification of revenue sources for projects, and proposed time schedules and milestones; R2.2 Follow a process of collecting input from the public and other County departments on the proposed five year plans, and adopt both documents to guide the two department's work plans and budgets; R2.3 Implement a process where the five year plans for both departments are reviewed and updated annually in a workshop with the Board of Supervisors that takes place well in advance of the budget review and hearing process so that department management can 13 Harvey M. Rose Accountancy Corporation secure funding and other resources in a timely manner to ensure that the highest priority projects are able to be accomplished in the targeted time frame; and, R2.4 Direct the Directors of Transportation and General Services to develop and provide reports twice a year; once when the proposed budget is submitted to the Board and once at the recommended annual planning workshops, showing all projects in process, comparing original and actual costs and timing, and explaining any variances in either. Costs and Benefits The General Services Department is planning to use the services of an outside consultant in preparation of their multi- year facilities plan. The cost for this is unknown as of the writing of this report. There would not be any other new direct costs associated with the above recommendations. Benefits would include a better use of resources by focusing the General Services and Transportation departments on specific agreed upon capital project priorities and road maintenance work, a more streamlined budget process for capital projects, and greater accountability by department managers for delivery of projects on time and budget. Responses Required for Findines F2.1 through F2.4 El Dorado County Board of Supervisors Responses Required for Recommendations R2.1 through R2.4 El Dorado County Board of Supervisors 14 Section 2: Capital Projects Harvey M. Rose Accountancy Corporation COSICENIER 305 DOf - CAPITAL PROJECTS EL DORADO COUNTY WORK PROGRAM 2001- 2002 BUDGET YEAR 1A1RK SERVICES DINER FIXED VEHICLE OVERHEAD INTRAFUND ORDER DESCRIPIION LABOR L SUPPLIES CHARGES ASSETS USAGE CHARGES TRANSFER$ TOTAL 08/ 24/ 2001 REVENUE REVENUE SOURCE AMOUNT SUPPORT TO O THER GOVERNMENT AGENCIES 52101 CONTRIBUTION TO OTHER AGENCY 0 0 50,000 0 0 0 0 50,000 STATE- RSIP 182.9 50,000 53108 US 50 WEST BOUND- PONDEROSA 6 N SHINGLE SIGNALIZATION 0 1,556,300 22,000 0 0 0 114,580 1,692,880 STATE- RSIP 182.6d1 300,000 CALTRANS 300,000 RA2 1 STATE SYSTEM T, IM 1,092,880 53110 NWY 50 IIOV LANE EDN 10 SHINGLE SPRINGS 0 0 0 0 0 0 5,000 5,000 RA2 1 STATE SYSTEM . TIM 5,000 53112 FORHI ROAD IMPROVEMENTS - CITY 0 0 150,000 O 0 0 O 150,000 150,000 CATEGORY TOTAL 0 1,556,300 222,000 0 0 0 119,580 1,897,880 1,897,880 CAPITAL IMPROVEMENT PROJECTS 71317 MISSOURI FLAT INTERCHANGE PSR 0 457,880 28,500 0 0 0 99,620 586,000 FUND BALANCE EDCTC CARRYOVER 96,706 RA2 1 STATE SYSTEM TIM 489,294 71318 EDIT BLVD INTERCHANGE PSR 0 581,000 1,524,000 0 0 0 145,000 2,250,000 EL DORADO HILLS RIF/ SALMON FAL 750,000 OTHER FINANCING SOURCES 1,500,000 71319 CAMINO INTERCHANGE 0 0 0 0 0 0 41,669 41,669 FUND BALANCE EDCTC CARRYOVER 31,669 RA2 2• 5 STATE TIM FEE 10,000 71329 UNITE ROCK RD REALIGII14EIlT 0 27,500 2,500 0 0 0 120,000 150,000 EL DORADO HILLS RIF/ SALMOII FAL 150,000 71350 EDIT BLVD E/ B DIAGONAL 0 2,134,901 682,500 0 0 0 38,849 2,856,250 EL DORADO HILLS RIF/ SALMOII FAL 2,856,250 71351 BIKEPATH- HARVARD WAY/ CLERMONT 70 E011 CSO PARK 0 128,953 500 0 0 0 29,666 159,119 SMVAQ COMV AIR QUALITY) 39,780 COSICENTER 305 DOI - CAPITAL PROJECTS EL DORADO COUNTY WORK PROGRAM 1001- 2002 BUDGET YEAR 08/ 24/ 2001 WORK ORDER DESCRIPTION LABOR SERVICES L SUPPLIES 0111ER CHARGES FIXED ASSETS VEHICLE USAGE OVERHEAD CHARGES INTRAFUND TRANSFERS 10fAL REVENUE SOURCE REVENUE AMOUNT TRANSPORTATION ENHANCEMENT ACT 103,719 0111ER GOVT AGENCIES 15,620 BIKEPATII- EL DORADO HILLS BLVD/ fRAHCISC0 TO GOVERNORS 0 47,300 3,700 0 0 0 64,000 115,000 SHVAQ ( DMV AIR QUALITY) 13,225 71352 TRANSPORTATION ENHANCEMENT ACT 101,775 0 IHly 50 ROUTE ADOPTION 0 49,500 500 0 0 0 50,000 100,000 RAZ 1 STATE SYSTEN , TIN 100,000 71353 PONDEROSA RD 0 3,608,527 0 0 0 0 0 3,608,527 FUND BALANCE - UNRESTRICTED 309,649 72100 ROAD REHABILITATION FUND BALANCE GOVERNORS CONGEST 1,755,690 TRANSPORTATION TAX IDA 43,188 OPERATING TRANSFERS IN 1,500,000 EL 00 HILLS NORTHERLY ALLIGNMENT 0 0 0 0 0 0 40,000 40,000 EL DORADO HILLS RIF/ SALMON FAL 40,000 72332 72334 MISSOURI FLAT/ PLEASANT VALLEY CONNECTOR 0 98,750 1,065,425 0 0 0 101,438 1,265,613 TIN 1,265,613 72335 LATROBE ROAD - WHITE ROCK 0 WETZEL OVIATT 0 464,344 4,500 0 0 0 663,156 1,132,000 EL DORADO HILLS RIF/ SALMON FAL 1,132,000 0 0 0 0 0 0 95,000 95,000 TIM 95,000 72343 CAMERON PARK DRIVE PHASE 11 72353 GRII VLY RD WIDENING/ SIIADOWFAX 10 BROWNS RAVINE 0 4,041,999 1,465,724 0 0 0 166,184 5,673,907 EL DORADO HILLS RIF/ SALMON FAL 1,352,382 TIM 1,588,326 RISC REIMBURSABLE 430,000 LONGTERM ADVANCE 2,303,199 72354 GREEN VALLEY RD WIDENING COMMERCIAL AREA B 0 169,691 411,301 0 0 0 174,693 755,685 TIN 294,717 LONGTERM ADVANCE 460,968 72355 GREEN VALLEY RD WIDENING MORMON ISLAND TO fRANCISCO 0 39,500 2,000 0 0 0 106,000 147,500 EL DORADO HILLS RIF/ SALMON FAL 89,975 TIN 57,525 73346 IIWY 49/ FOWLER LN INTERIM INTERSECTION 0 1,299,900 12,016 0 0 0 11,557 1,323,473 CALTRANS 77,000 1 a COSTCERTER 305 DOT - CAPITAL PROJECTS EL DORADO COUNTY WORK PROGRAM 2001- 2002 BUDGET YEAR 08/ 24/ 2001 ba D3 rrt Co rt ( D wn 1RIRK ORDER DESCRIPTION LABOR SERVICES L SUPPLIES OTHER CHARGES FIXED ASSETS VEHICLE USAGE OVEANEAD CIIAROES INTRAFUND TRANSFERS TOTAL REVENUE SOURCE REVENUE AMOUNT II E S ( HAZARD ELIH SEC) 500,000 RAZ 1 STATE SYSTEM TIM 746,473 73349 GREEN VALLEY NO 41 MORMON ISLAND 0 1,720,499 667,369 0 0 0 70,001 2,457,869 EL DORADO HILLS RIF/ SALMON FAL 1,046,708 TIM 669,206 CIP INIRA DEPARTMENT 65,000 MISC REIMBURSABLE 11,086 LONGTERM ADVANCE 665,869 73351 METAL BEAM GUARDRAILS - 7 LOCATIONS 0 0 0 0 0 0 15,000 15,000 11 E S ( HAZARD ELIH SEC) 15,000 77103 BRIDGES/ GRIT VLY RD- RECONST GROG 0 DRY CRK 0 18,278 256,000 0 0 0 54,110 328,388 FUND BALANCE RSTP CARRYOVER 135,091 IIBRR ( IDLY BRIDGE RE/ REII) 193,297 77108 BRIDGES/ BRIDGEPORT SCHOOL RD- REPLACE BRGE 0 398,804 27,000 0 0 0 49,780 475,584 FUND BALANCE RSTP CARRYOVER 163,706 RSTP STATE EXCHANGE 205,286 HBRR ( IIWY BRIDGE RE/ REN) 106,592 77109 GR11 VLY RD BRIDGE 0 TENNESSEE 0 140,000 10,500 0 0 0 24,500 175,000 FUND BALANCE RSTP CARRYOVER 35,088 RSTP STATE EXCHANGE 83,912 IIBRR ( NWY BRIDGE RE/ REII) 56,000 77110 SALMON FALLS BRIDGE 2 AMERICAN RIVER 0 139,800 4,684 0 0 0 20,200 164,684 FUND BALANCE RSTP CARRYOVER 11,566 RSTP STATE EXCHANGE 11,470 HORN ( IIWY BRIDGE HIRER) 141,648 77112 BRIDGES - HT MURPHY 0 AMERICAN RIVER 0 135,000 0 0 0 0 23,606 158,606 FUND BALANCE RSTP CARRYOVER 28,606 RSTP STATE EXCHANGE 10,000 IIBRR ( IIWY BRIDGE RE/ REII) 120,000 77113 BRIDGE BARRIER RAILING 0 98,000 0 0 0 0 23,022 121,022 FUND BALANCE RSTP CARRYOVER 3,545 RSTP STATE EXCHANGE 11,241 IIBRR ( IIWY BRIDGE RE/ REII) 106,236 MIRK UROLN CATEGORY TOTAL - P W a COSTCLYTER 305 DOT - CAPITAL PROJECTS EL DORADO COUNTY WORK PROGRAM 2001- 2002 BUDGET YEAR 79999 SUBTOTAL 0 17,356,426 6,390,719 0 0 0 1,720,445 25,467,590 25,467,590 TOTA L AVOWED C0SI $_ 0 0 0 0 0 0 0 0 0 TOTAL 0 17,356,426 6,390,719 0 0 0 1,720,445 25,467,590 25,467,590 08/ 24/ 2001 UESCRI1- Tfoil SERVICES OTHER LABOR A SUPPLIES CHARGES FIXED ASSETS VEHICLE USAGE OVERHEAD CHARGES INTRAFUND TRANSFERS TOTAL REVENUE SOURCE REVENUE AMOUNT COHIIHGEHCY - PROJECTS 1101 COMPLETED 0 0 0 0 0 0 - 626,186 - 626,186 TIM - 626,186 0 15,800,126 6,168,719 0 0 0 1,600,865 23,569,710 23,569,710 tA) RK SERVICES OTHER FIXED VEHICLE OVERHEAD INTRAFUND REVENUE REVENUE ORDER DESCRIPTION LABOR L SUPPLIES CHARGES ASSETS USAGE CHARGES TRANSFERS TOTAL SOURCE AMOUNT R OAD MAINTENACE PROJ ECTS COSICENTER 306 001 - ROADS EL DORADO COUNTY WORK PROGRAM 2001- 2002 BUDGET YEAR 08/ 24/ 2001 41100 IRAF SIG L LGT MATH\ WS RD 11,628 161,650 0 0 1,663 5,145 0 180,086 DEPARTMENT DISCRETIONARY 180,086 41101 SIGNAL MAINT - TO 0 13,000 0 0 0 0 0 13,000 DEPARTMENT DISCRETIONARY 13,000 43100 I NSTALL NEW SGH, SIRP L Sf1Y DEV/ WS RD 76,654 18,050 0 0 11,689 36,155 0 142,578 DEPARTMENT DISCRETIONARY 142,578 43101 INSTALL SGH, SIRP A SFTY OEV/ CATTLE GUARD INSTALL TO 3,037 3,150 0 0 319 986 0 7,492 DEPARTMENT DISCRETIONARY 7,492 44100 PATCHING/ OVERLAY PAIC11111G ( BASE RECONST.) 265,812 344,356 0 0 123,300 116,585 0 850,061 DEPARTMENT DISCRETIONARY 550,061 44101 PATCIIIIIG/ VS O/ L PATCH - 10 ( BASE RECONST.) 99,209 192,385 0 0 74,493 53,504 0 419,591 DEPARTMENT DISCRETIONARY 419,591 45136 CONTRACT OVERLAY- EL DORADO HILLS BUS PARK 0 36,000 0 0 0 0 0 36,000 MISC REIMBURSABLE 18,000 OPERA71NG TRANSFERS IN 18,000 46100 CHIP SEAL/ WS RD 297,113 481,153 0 0 139,783 131,667 0 1,049,716 DEPARTMENT DISCRETIONARY 1,049,716 46101 CHIPSEAL TO 0 230,000 0 0 0 0 0 230,000 DEPARTMENT DISCRETIONARY 230,000 48100 PAVEMENT MANAGEMENT SYSTEM 43,714 1,900 0 0 1,476 14,588 0 61,678 DEPARTMENT DISCRETIONARY 61,678 48101 MAINTAINED MILEAGE 13,214 150 0 0 36 4,346 0 17,746 DEPARTMENT DISCRETIONARY 17,746 48102 ROUT MAIN/ RD SUR POT IILS 536,044 302,926 0 0 313,323 251,899 0 1,404,192 DEPARTMENT DISCRETIONARY 1,404,192 48103 ROUT MAIN/ AC GERMS 3,834 9,297 0 0 2,226 1,827 0 17,184 DEPARTMENT DISCRETIONARY 17,184 48104 ROUT MATH/ CRACK SEALS 27,778 30,300 0 0 18,111 14,016 0 90,205 DEPARTMENT DISCRETIONARY 90,205 48105 ROUT MAIN/ RD SUR GRAD 7,895 0 0 0 3,696 3,331 0 14,922 DEPARTMENT. DISCRETIOHARY 14,922 48107 ROUT MAIN/ ORUSII L WEED 162,995 0 0 0 87,839 75,470 0 326,304 DEPARTMENT DISCRETIONARY 326,304 COSTCENTER 306 DOT - ROADS EL DORADO COUNTY 08/ 24/ 2001 WORK PROGRAM 2001- 2002 BUDGET YEAR Won K OROLIT DESCRI1111011 LABOR SERVICES R SUPPLIES OTHER CHARGES FIXED ASSETS VEHICLE USAGE OVERHEAD CHARGES INTRATUND TRANSFERS TOTAL REVENUE SOORCE REVENGE AMOUNT 48108 ROUT MAIN/ RD SIDE DITCH 156,884 1,208 0 0 86,882 72,512 0 317,486 DEPARTMENT DISCRETIONARY 317,486 48109 ROUT MAINT/ DRAINAGE EASHEIII 759 0 0 0 369 333 0 1,461 DEPARTMENT DISCRETIONARY 1,461 48110 ROIL MAIN/ SWEEPING 41,701 1,200 0 0 24,884 20,122 0 87,901 DEPARTMENT DISCRETIONARY 87,907 46111 ROUT MAIN/ CLN- RPR CULVERT 280,924 22,647 0 0 140,067 125,593 0 569,231 DEPARTMENT DISCRETIONARY 569,231 68111 ROUT HAITI/ TNCE, GORL, OAR REP 8,354 10,000 0 0 4,066 3,664 0 26,084 MISCELLANEOUS SERVICES/ INSPECT 5,000 DEPARTMENT DISCRETIONARY 21,084 48114 RaOT RAIN/ SIGH HAIRY - 115 278,130 24,467 0 0 78,784 128,779 0 $ 10,160 MISCELLANEOUS SERVICES/ INSPECT 5,000 DEPARTMENT DISCRETIONARY 505,160 48115 ROUT MAIN/ CNTLR L MRK HAITI - WS 334,573 129,117 0 0 66,208 155,792 0 705,690 DEPARTMENT DISCRETIONARY 705,690 48116 ROUT MAIN/ DEAD ANIMAL REMOVAL 0 15,000 39,000 0 0 0 0 54,000 DEPARTMENT DISCRETIONARY 54,000 48118 ROOT MAIN/ 8RDG MAIN ; 79,741 56,417 0 0 38,849 34,975 0 209,984 DEPARTMENT DISCRETIONARY 209,984 46119 YARD MAINTENANCE 10,777 4,097 0 0 5,434 4,799 0 25,107 DEPARTMENT DISCRETIONARY 25,107 48122 ROOT MAINT/ EROSION 1,639 1,400 0 0 1,256 902 0 5,197 DEPARTMENT DISCRETIONARY 5,197 48123 EMERGENCY RESPONSE 4,810 0 0 0 2,347 2,110 0 9,267 DEPARTMENT DISCRETIONARY 9,267 48124 ROUT HAIRY/ SPRAYING 22,784 48,067 0 0 11,098 9,993 0 91,942 DEPARTMENT DISCRETIONARY 91,942 48127 DURAPATCHING 126,642 53,193 0 0 68,777 58,383 0 306,995 DEPARTMENT DISCRETIONARY 306,995 48129 SIGN REMOVAL IN ROW 4,149 0 0 0 148 5,828 O 1 0,125 DEPARTMENT DISCRETIONARY 10,125 48131 SIGN MAINTENANCE - TO 6,789 2,900 0 0 1,063 3,287 0 14,039 DEPARTMENT DISCRETIONARY 14,039 W W COSFCENTER 306 DOT - ROADS EL DORADO COUNTY WORK PROGRAM 2001- 20OZ BUDGET YEAR 08/ 24/ 2001 QQ FD O rt rt W O ( D WORK ORDER DESCRIPTION LABOR SERVICES i SUPPLIES OTHER CHARGES FIXED ASSETS VEHICLE USAGE OVERHEAD CHARGES INTRAFUND TRANSFERS TOTAL REVENUE SOURCE REVENUE AMOUR I 48132 CENTERLINE HAIRY - TO 16,870 22,950 0 0 3,724 8,017 0 51,561 DEPARTMENT DISCRETIONARY 51,561 48134 ROUT MAIHT/ FNCE, GURL, PAR REP TO 380 0 0 0 190 167 0 737 DEPARTMENT DISCRETIONARY 737 48135 R0111 MAIIII/ BRIDGE HAIRY. T O 3110 0 0 0 190 167 0 737 DEPARTMENT DISCRETIONARY 737 48901 SAFETY PROJ - 2 WAY LEFT TURN LN/ PLEASANT VLY RD E/ O O. S. 0 10,000 0 0 0 0 0 10,000 DEPARTMENT DISCRETIONARY 10,000 45902 SAFETY PROJ - 2 WAY LEFT TURN LM/ SUNSET TO FRENCH CRK 0 15,000 0 0 0 - 0 0 15,000 DEPARTMENT DISCRETIONARY 15,000 48903 SAFETY PROJ - LEFT RUN L11/ GREEN VLY 0 W DEER VLY 0 10,000 0 0 0 0 0 10,000 DEPARTMENT DISCRETIONARY 10,000 48904 SAFETY PROD - ALL WAY SLOP/ COLD SPROS 0 GOLD HILL 0 15,000 0 0 0 0 0 15,000 DEPARTMENT DISCRETIONARY 15,000 48908 SAFETY PROJ - LRDSCPE ISLANDS/ CCC TO DUMP/ SPREAD ROCK 0 30,000 0 0 0 0 0 30,000 DEPARTMENT DISCRETIONARY 30,000 49100 SNOW REMOVAL/ WS 90,408 45,213 0 0 30,828 35,275 0 201,724 DEPARTMENT DISCRETIONARY 201,724 49101 SNOW REMOVAL/ TO 697,396 76,437 4,768 0 271,154 217,112 0 1,266,867 DEPARTMENT DISCRETIONARY 1,266,867 49275 DOT/ FOREST SERVICE CUL- DE- SACS 31,031 69,615 0 0 7,839 26,067 O 134,552 DEPARTMENT DISCRETIONARY 134,552 CATEGORY TOTAL 3,744,080 2,488,245 43,768 0 1,642,119 1,623,396 0 9,541,600 9,541,608 SUPPORT TO O THER GOVERNMENT AGENCIES 50000 CAPITAL IMPROVEMENTS 59,230 0 0 0 0 52,850 - 112,080 0 52101 CONIRIOUTION TO O111ER AGENCY 0 0 86,000 0 0 0 0 86,000 , TRANSPORTATION TAX IDA 86,000 CATEGORY TOTAL 59,230 0 86,000 0 0 52,850 - 112,080 86,000 86,000 b 3. Budget Timing, Information and Analysis F3.1 F3.2 F3.3 The Board of Supervisors receives very comprehensive, well organized reports on the status of the budget at mid- year but no further formal reports until they receive the proposed budget for the next fiscal year in June. As stewards of the County's financial resources, more regularly produced status reports and updates should be provided with less detail than the mid- year reports but with enough information to allow the Board to monitor performance and receive early warnings of potential fiscal problems. The County's financial information system allows for production of a wide variety of ad- hoc reports and analysis of expenditures and revenues accessible to all department managers. A monthly report to the Board showing actual expenditures and revenues by department, with a projection of the County's financial position at year end, could easily be produced and would facilitate more Board and public involvement in monitoring the County's fiscal status. It would eliminate surprise developments such as the increase from $ 12.5 to $ 21.5 million in fund balance available reported between the proposed and budget addenda for FY 2001- 02. Information of this sort would also provide a basis for other questions and analyses of situations when revenues or expenditures are not at the level originally projected. The analysis of the proposed budget each year consumes many months of staff time but largely focuses on incremental appropriations requested by the departments or recommended by the Chief Administrative Officer but not the baseline budget. Oftentimes, savings can be realized in the baseline budget by improving the efficiency of operations, reorganizing or consolidating programs or increasing revenues. One of the most effective means of identifying opportunities for savings in the baseline budget is through departme ntal performance audits. The major points of public presentation and discussion about the County's budget are: 1) the mid- year budget report to the Board of Supervisors; 2) presentation of the proposed annual budget in June; 3) presentation of the addenda budget in August; and, 4) budget hearings in September. At all four points, a great deal of useful information is provided to the Board covering all departments, revenue sources and operational issues. The information is prepared by the Chief Administrative Officer and, in the past, discussion about the contents were largely between the Board and the Chief Administrative Officer and the Auditor- Controller. For the FY 2001- 02 budget, the process was expanded when the Board of Supervisors requested that each department make a presentation about their budget and operations. The mid- year budget report provided in February 2002 contained discussion of projected fund balance, expenditures and revenues by department, a discussion of expected increases in health benefits costs, detailed revenue projections ( summarizing projections prepared by the Auditor- Controller), capital project highlights, a discussion of the State budget, a regional economic forecast, salary projections for FY 2002- 03, and departmental savings. It provides a good deal of information of interest to the Board of Supervisors, department managers and the public. 22 Harvey M. Rose Accountancy Corporation Timing of County Budget Review and Approval Section 3: Budget Timing, Information and Analysis The proposed budget document for the subsequent fiscal year is provided in June of each year and includes detailed revenue projections and proposed expenditures for each department. Information for each department is also presented including staffing detail, descriptions of all major programs operated by the department, workload indicators, actual revenues and expenditures for the previous two fiscal years and proposed revenues and expenditures by major programs or costs centers for all departments. An overview of the County's financial situation is presented including detailed revenue estimates for the budget year, changes in State and other funding sources, and roll ups of expenditure data by fund and functional areas. The third and final budget report prepared by the Chief Administrative Officer is provided in August. This report provides final revenue and expenditure estimates for the year after the State budget has been adopted and actual fund balances are known based on better and more complete prior year actual data. While all three reports provided to the Board of Supervisors include a substantial amount of useful information, there are no routinely produced reports between these three to keep the Board abreast of the overall fiscal situation of the County and to have early warnings of potential problems. Budget related items do come up at Board meetings if an individual department is requesting mid- year supplemental funding or if the supervisors request information on a particular department or a budget related topic. However, fiscal information is not otherwise routinely reported in a standardized report to the Board to allow for comparisons and trend analyses throughout the year. Department budget staff spend many months of the year going through their internal budget review and preparation processes and then explaining and defending their proposals to the Chief Administrative Office before they are submitted to the Board of Supervisors. Then, for many departments, there are additional analyses and expenditure plans to be prepared between June and September as actual fund balance amounts become known, the State budget is adopted and other adjustments are made. The net result is a lengthy process consuming more than half the year and a budget mostly prepared six months earlier being reviewed by the Board of Supervisors in September. While the County is subject to State timing requirements governing the preparation and adoption of the budget, attempts should be made to complete more of the budget process in June so that fewer staff hours are consumed in duplicative efforts between June and September and so the budget reviewed and discussed by the Board of Supervisors is more current. A review of changes between the proposed and addenda budget for FY 2001- 02 shows that budget appropriations increased by $ 23 million between June and September. Most of the change, or 77.3 percent, was in the General Fund and Roads Fund. Exhibit 3.1 presents the changes for all funds. 23 Harvey M. Rose Accountancy Corporation Source: Proposed and Addenda Budgets, FY 2002- 03 The $ 9.5 million in Roads Fund monies was mostly from capital project carryovers and increases in estimated fund balance. For the General Fund, the increase was primarily generated from carryover fund balance, mostly due to a combination of capital project carryover, actual expenditures being less than budgeted, and actual revenues being more than budgeted the previous year. The fourth largest contributor to the increase, Accumulated Capital Outlay, was also the result of an increase in fund balance available compared to what was estimated in the proposed budget due to more projects being carried over from the previous year than anticipated in June. Section 3: Budget Timing, Information and Analysis By producing more detailed projections of revenues and expenditures throughout the year, particularly in the second half, and projecting year- end fund balance monthly, the County's estimates of carryover fund balance in June should become more accurate and closer to the amounts now not identified until September. With better tracking and reporting of capital project expenditures and timing, as recommended in Section 2 of this report, and monthly projections of year- end fund balance for the Roads and Accumulated Capital Outlay funds, the discrepancy between the June and September budget for capital project carryover funds should also be decreased. The net result of more accurate forecasting would be fewer changes between June and September and less work for all County staff in creating and analyzing a second budget document with numerous revisions for the September hearings. Though the State budget could be and probably will be changed to some extent between June and September, most of it should be known and in place by June based on the Governor's budget. County estimates of the budget in June should be reasonably accurate for most of the State funding received. The County should endeavor to reduce discrepancies between the two budgets 24 Harvey M. RoseAccountancy Corporation Exhibit 3.1 Changes between Proposed and Addenda Budget Fund By Fund, Proposed Budget FY 2001- 02 Addenda Budget Difference Total Difference Roads Fund $ 31,856,908 $ 41,367,148 $ 9,510,240 41.2% General Fund 147,900,815 156,236,963 8,336,148 36.1% Health Department 17,128,851 19,719,350 2,590,499 11.2% Accumulated Capital Outlay 3,673,718 5,403,519 1,729,801 7.5% Mental Health Services 9,749,849 10,463,260 713,411 3.1% Tobacco Settlement 487,860 487,860 2.1% Road District 2,460,871 2,617,875 157,004 0.7% Community Services 7,986,053 8,026,027 39,974 0.2% Special Aviation 20,000 20,000 - 0.0% Fish & Game 5,000 5,000 - 0.0% EIR Development Fees 300,000 300,000 - 0.0% Erosion Control 4,918,455 4,413,840 ( 504,615) - 2.2% TOTAL $ 226,000,520 $ 249,060,842 $ 23,060,322 100.0% Section 3: Budget Timing, Information and Analysis and complete most of the budget process in June, with only some minor changes to be approved in September. While production of the three budget reports that the Board now receives involves a substantial amount of work for the Chief Administrative Officer and department fiscal staffs, other regularly provided information between these three reports is needed. Current budget information is readily available on the County's Financial Management Information System ( FAMIS) and could be produced without extensive staff work. Of key importance for a monthly report is: 1. Budgeted vs. actual expenditures and revenues by department and major revenue source 2. Explanations of major variances between budgeted and actual expenditures and revenues 3. Projected expenditures, revenues and fund balances, by fund, for year end 4. Key performance indicators This information would provide ongoing assessments of the County's fiscal situation and individual department performance and would serve as a supplement to the annual budget review and approval process by making the Board aware of issues affecting certain revenues or individual departments during the year. The Interim Chief Administrative Officer directed all department heads in April 2002 to undertake detailed re- computations of their estimated year-end Net County Costs to improve the forecast for FY 2002- 03. Even though monthly reports at the early part of the year would generally not be too revealing with so little time passed since budget adoption, the Board should still receive these reports as they will serve as the foundation for subsequent reports during the year. As the year progresses, the Board may want to request other special reports with more detail on a certain department or revenue or an issue such as turnover or workers compensation claims if a particular department is experiencing a high rate of claims. The County needs to analyze its baseline programs and budgets Another type of information that would be useful to inform the annual budget process is evaluations or performance audits of individual departments and programs conducted throughout the year. This would provide the Board with more detail that could be used at budget time regarding all aspects of individual department operations and provide a stronger basis for decisions about baseline department funding levels. The budget review process assumes that a baseline level of funding will be provided for all departments. The discussion in the proposed budget regarding funding changes almost entirely deals with incremental funding levels, or additions to the base level of funding. As in most counties, the Chief Administrative Office's analysis of budget requests submitted by the departments is focused primarily on any increases to the baseline budget but generally does not question the existing level of funding. Comments in the proposed budget document focus on increases or changes in the budget and recommendations on what new positions or programs should be funded, if any. For the most part there is no discussion or recommendations to decrease funding of the baseline budget through improved efficiency and/ or increased revenue. 25 Harvey M. Rose Accountancy Corporation Section 3: Budget Timing, Information and Analysis There is an implicit assumption in the budget review that existing allocation levels should not be changed. In fact in many instances changes could be made to department operations or business processes and costs reduced through efficiency improvements or revenues increased through improved collections or establishing fee levels that capture more of the costs actually being incurred. One way of identifying such changes is through detailed review of department operations through performance auditing. Performance auditing can briefly be described as a review of all aspects of a department's operations to determine if the department is operating in compliance with all applicable laws and as efficiently, effectively and economically as possible. Performance audits can be conducted by outside consultants or in- house staff. While regular conduct of performance audits might represent a new cost to the County, if new staff is hired or consultants are used,' over time audits should more than pay for themselves with cost savings and/ or revenue increases for the departments reviewed. Another benefit would be improved service levels for the public by identifying improvements in business processes and methods of streamlining operations. El Dorado County engaged a consultant to conduct a performance audit of the Department of Transportation and is planning one soon for the Department of Social Services. Efforts such as these should be continued and expanded to include all other departments on a multi- year cycle. Performance audits should take place throughout the year but their recommendations could be used in the budget process by identifying areas where departments could operate more efficiently particularly in the base budget. For example, a recently conducted analysis of Sheriffs Department staffing conducted independent of their budget preparation process recommended adding more permanent positions to reduce overtime. An analysis of a department's management structure might reveal an opportunity to consolidate and reduce management positions based on an analysis of duties performed. An audit of user fees charged by the County might show that they are not fully recovering costs and should be adjusted accordingly. In some jurisdictions performance audits are conducted on an ongoing basis so that all departments are audited over a certain number of years. Other counties select audit topics annually based on an assessment of the risk or exposure of each department and the potential impact of realizing improvements in that department. Other jurisdictions conduct performance audits as the need arises. An ongoing performance audit program in El Dorado County would have multiple benefits including improved service levels, reduced costs of operations and making resources available for other purposes. 1 The County should explore the possibility of conducting performance audits with existing audit staff through re-prioritization of their current duties. If this is possible, new costs would not be incurred. 26 Harvey M. Rose Accountancy Corporation Recommendations It is recommended that the Board of Supervisors: Costs and Benefits Section 3: Budget Timing, Information and Analysis R3.1 Direct the Chief Administrative Officer and/ or the Auditor- Controller to begin producing monthly fiscal status reports showing a comparison of budgeted and actual expenditures and revenues by department, projected expenditures and revenues through year end, projected year- end fund balance for each of the County's funds based on the latest actual revenues and expenditures, and selected key performance indicators for individual departments; R3.2 Direct the Chief Administrative Officer to develop and implement a plan to reduce differences between the proposed budgets in June and September and reduce County staff time spent preparing for the second budget hearing by using the recommended monthly projections of revenues, expenditures and fund balance and by more closely monitoring capital project progress and funding in the second half of the fiscal year; R3.3 Direct the Chief Administrative Officer to implement a performance audit program to be conducted either in- house by staff in the Auditor- Controller's office, staff reporting directly to the Board of Supervisors, by consultants, or a combination of in- house staff and external consultants; and, R3.4 Establish a performance audit schedule using a risk assessment approach where all departments are evaluated against a set of criteria to indicate where the largest benefits are likely to occur from conducting performance audits. The costs of implementing the above financial forecasting recommendations would primarily be existing staff time. The benefits would include staff time now spent preparing for the September budget addenda process becoming available for other purposes and more of the budget process being complete in June. The costs of an ongoing performance audit program would depend on whether new staff is hired and, if so, the number and level of audits to be conducted in a year. Assuming two to three audits would be typical and two to three staff positions, estimated costs would be between $ 100,000 and $ 200,000 per year. To the extent existing audit staff could be used for this purpose by re-prioritizing their activities rather than adding new staff, additional costs would not be incurred. The benefits of a performance audit program should greatly exceed the costs in terms of cost savings and revenue increases identified through the performance audit process. 27 Harvey M. Rose Accountancy Corporation Responses Required for Findings F3.1 through F3.3 El Dorado County Board of Supervisors Responses Required for Recommendations R3.1 through R3.4 El Dorado County Board of Supervisors Section 3: Budget Timing, Information and Analysis 28 Harvey M. Rose Accountancy Corporation 4. Internal Service Funds F4.1 F4.2 F4.3 F4.4 The County budget includes two internal service funds; the risk management fund covers centralized County insurance costs and the fleet management fund covers the County's vehicle maintenance and replacement services. Internal service fund costs are not as predictable as operating departments because they rely on forecasts of future needs and variables such as the number of employees who will need health services or be injured on the job, the extent to which claims will be filed against the County and the number of vehicles that will need to be replaced. The budget for these two funds in FY 2001- 02 is approximately $ 20.9 million and together the County maintains reserves for these two funds of another approximately $ 16 million. This level of expenditure and reserves represents a larger budget than most County departments. Key information on assumptions used for these funds is not fully disclosed in the proposed and addenda budget documents to assist the Board of Supervisors in determining the appropriate level of appropriations and reserves for these funds. The budget does not present actual expenditures for previous years or projections of expenditures for subsequent years. Without this information it is not easy to determine if appropriate funding and reserves are in place. If too much is budgeted and reserved, budget resources are tied up that could otherwise be used for other purposes. If too little is budgeted, the County may need to reduce expenditures elsewhere or use contingency funds to meet its insurance or fleet obligations. The Risk Management budget for FY 2001- 02 includes reserves based on five year projections for the County's risk management fund. The basis for these projections should be provided to the Board of Supervisors, who should then adopt a County policy regarding appropriate reserve levels for each type of insurance. Historical and projected vehicle purchase expenditures are not presented in the budget. Such information would help the Board determine an appropriate level of funding and reserves for the County's vehicle replacement fund. Internal service funds are defined as funds used to account for the financing of goods or services provided by one department or agency to other departments or agencies, on a cost reimbursement basis. El Dorado County has two such funds: 1) Risk Management and 2) Vehicle Replacement. The Risk Management fund is used to account for payments from all County departments to cover their share of the County's costs for general liability, employee health and workers' compensation insurance. The costs covered by the monies in this fund include claims payments, legal costs, insurance premiums for excess insurance', a third party administrator and staff and indirect costs of the County Risk Management Office. 1 The County is self- insured but buys third party commercial insurance only for incidents above a certain dollar threshold. This helps prevent any dramatic swings in pay outs from year to year. 29 Harvey M. Rose Accountancy Corporation Section 4: Internal Service Funds The fleet management fund charges each department for the costs of maintaining and acquiring and maintaining the department's vehicles and heavy equipment. The charges also cover the costs of County fleet management staff and related indirect costs. Key budgetary decisions to be made for these internal service funds are: a) the level of appropriation to include in the budget to meet annual expenses; and, b) the level of reserves to include in the fund to cover known future liabilities. Charges to customer departments are based on appropriated annual expenditures and a proportionate share of reserves. Annual appropriations are needed to cover the operating costs for a single budget year. Reserves are established for internal service funds to cover known or expected costs beyond what is expected in the budget year. Particularly with insurance, costs can be paid over multiple years. Although costs can be estimated for a claim filed in the current year, the case may not actually be settled for several years out. The risk management fund reserve provides funds for these type of situations and for unexpected pay outs in the event that a large claim against the County is settled sooner than expected or an unpredicted unusually high employee disability payment has to be made in a single year. Commercial excess insurance is also purchased by the County to cover high cost unusual cases. Fleet management fund reserves might be used if a number of vehicles or heavy equipment unexpectedly need replacement in addition to what is expected in the County vehicle replacement schedule. Insurance expenditures are determined with input from actuaries who produce multi- year projections of likely future pay outs based on historical loss and expenditure data, known claims filed, demographics of the work force, changes in law and other contributing factors. For fleet management, maintenance and replacement costs can be projected based on existing fleet characteristics such as age and mileage plus any projected increases in fleet size or mix needed based on new or expanded programs or workload in the County. Risk Management Fund As mentioned above, El Dorado County's risk management fund is comprised of three components: 1) employee health insurance; 2) general liability; and 3) workers' compensation. Each represents a significant cost to the County but the budget document does not present details on the three components. Instead, the County risk management fund is presented in aggregate with no breakdown of how much of the total cost is attributable to each component. Total budgeted expenditures for FY 2001- 02 were approximately $ 18.1 million for all components of the risk management program. This amount is separate from the reserves kept in the risk management fund to cover known and projected insurance liabilities in future years. The budget document does not report the approximately $ 12 million reserved for the risk management fund nor does it report how much of this is attributable to each of the three components of the fund. 30 Harvey M. Rose Accountancy Corporation Section 4: Internal Service Funds Details on the risk management fund should be presented in the proposed budget for a number of reasons. First, it is important for the Board of Supervisors to know which costs are increasing, which are decreasing, and what, if anything, County management has done or can do to control these costs. For example, employee health insurance costs are expected to increase significantly in the next year, an issue that was widely discussed in the budget hearings for FY 2001- 02, but it would be useful to present these costs in the context of overall health insurance costs, separate from general liability and worker's compensation costs. Increases in workers' compensation costs cannot always be controlled but a large increase may raise questions about the extent to which County management has implemented safety training programs for employees. Similarly, a rise in risk management costs should be reviewed to determine if certain exposures resulting in frequent claims have been effectively dealt with by management. The proposed budget document for FY 2001- 02 presents information about the Risk Management office that is part of the Chief Administrative Office. The document presents revenues and costs for the Risk Management office, including County staff, claims payments and other administrative cost, as follows: Exhibit 4.1 Risk Management Revenues and Costs Presented in the Proposed FY 2001- 02 Budget FY 1999- 00 through FY 2001- 02 As can be the Services and Supplies expenditure line items of $ 17.4 million for FY 2001- 02 represents the bulk of risk management annual costs. Since this is such a large amount and is comprised of a number of different costs, more detail should be provided in the budget including 3 1 Harvey M. Rose Accountancy Corporation Actual FY 1999- 00 Approved FY 2000- 01 CAO Recommended FY 2001- 02 Revenues: Charges to Departments $ 12,764,911 $ 14,824,755 $ 17,194,416 Use of Money & Property 684,255 594,007 527,506 Fund Balance - 1,199,008 366,515 Other Sources 1,500 4,000 1,500 Miscellaneous 103,356 166,667 Total $ 13,554,022 $ 16,788,437 $ 18,089,937 Expenditures: Salaries & Benefits 378,356 415,759 427,897 Services & Supplies 13,914,111 16,165,149 17,427,744 Other Charges 159,663 207,531 231,094 Intrafund Transfers 2,390 3,200 Total $ 14,454,520 $ 16,788,439 $ 18,089,935 Section 4: Internal Service Funds how much is for claims payments, legal services, the third party administrator, excess insurance premiums, and other costs, for each of the three risk management fund components. Staffing for the office and workload indicators are presented in the proposed budget document as is a description of the office's programs and the Chief Administrative Officer's recommended changes in the budget. Determining Appropriate Reserve Levels for Internal Service Funds The revenue discussion includes the statement that the fund will be relying less on fund balance than it has in the past for health and worker's compensation. The discussion reports that reserves for the General Liability program are greater than what is needed and that Worker's Compensation reserves are lower than needed according to an actuarial analysis performed for the County. The Chief Administrative Office reports that it has prepared a five year plan to achieve reserves at a 70 percent confidence level for both the General Liability and Worker's Compensation fund. The 70 percent confidence level is described as a reserve level that will statistically be sufficient or better in 70 percent of the cases and inadequate 30 percent of the time. While it is laudable that the budget discloses the imbalance in reserves found in the two funds and a plan to correct it, the discussion has some deficiencies from a public decision making perspective. First, the actual amount of reserves in the two fund components are not presented in the budget nor is the fiscal impact of adopting the 70 percent confidence level approach clearly laid out. Alternative reserve scenarios are not presented so that the Board could see the fiscal impact of choosing other approaches to funding reserves for these funds at the 70 percent confidence level. The choice of a lower reserve level, which would not prevent the County from meeting its current year claims payment obligations, could potentially mean millions of dollars available for other purposes in the budget. On the other hand, the Board of Supervisors may want to adopt a higher reserve level policy that would require increasing the charges paid by departments to increase reserve levels in the fund. To make an informed decision, the budget should include the following: o Current amounts in reserve, shown separately for Workers' Compensation, General Liability and Health Benefits u Three years of projected actual expenditures for the budget year and the next five to ten years, shown separately for Workers' Compensation, General Liability and Health Benefits u The amount needed to fund reserves at alternative confidence levels, covering the spectrum of possible approaches ranging from no reserves for future year expenses if a " pay as you go" policy is adopted, funding to cover the current year and some future costs, funding to cover the current year and some but not all projected future costs, and funding to cover the current year and all projected future costs. 3 2 Harvey M. RoseAccountancy Corporation Exhibit 4.2 Example of Information to Provide to the Board of Supervisors for Consideration of Alternative Insurance Reserve Levels for Internal Service Funds 33 Section 4: Internal Service Funds Counties and public jurisdictions have varying policies on reserves. On one end of the spectrum, some counties and other public jurisdictions simply budget for their expected payments in the budget year. Others choose to maintain reserves to fully cover all known current and future liabilities and some counties choose a position between these two. The Board of Supervisors should be involved in deciding the level of reserves for each of these funds. To inform this decision, the budget document should include information in a table such as presented in the example in Exhibit 4.2: The County's financial statement for the fiscal year ending June 30, 2001 showed that the Risk Management fund had approximately $ 12.9 million in cash reserves for future costs. The liability for noncurrent insurance payments was reported in the financial statement as $ 11.9 million. In other words, there was enough cash in the fund to cover all known and projected pay outs for the current and future years that would have to be paid if the County suddenly went out of business and never received any more payments from its customer County departments. Since the likelihood of the County actually going out of business is quite small, the Board may want to consider a lesser reserve level. By presenting the projected pay outs for future years in the proposed budget, the Board would be better informed for deciding the optimal level of reserves. A summary of information that should be presented is shown in the following two exhibits. The numbers are for illustration purposes only and do not reflect the actual or projected expenses of El Dorado County. The information in Exhibit 4.3 would provide a snapshot of retained earnings, annual revenues, annual costs, and cash reserves on hand for the future and projected future liabilities, all in one table. Harvey M. Rose Accountancy Corporation Confidence level Reserves required 000s Pa as you o None 20% $ 3,000 35% $ 3,500 50% $ 4,000 65% $ 4,500 70% $ 5,000 80% $ 5,500 100% $ 6,000 Exhibit 4.3 Example of cash reserve, revenue and expenditure information to be presented in the proposed General Liability and Workers' Compensation Fund budgets ( in 000s) Note: Amounts shown are for illustration purposes only and are not actual El Dorado County amounts. Actual historical expenditures should be shown to provide information about typical annual expenditures, what is likely to be needed in future years and to help determine how much cash should be kept in reserve to meet those expenses. Exhibit 4.4 Example of payment data to be presented in budget for General Liability and Workers' Compensation Funds ( in 000s) Section 4: Internal Service Funds Information such as that shown in Exhibit 4.4 should be presented to the Board of Supervisors to identify average annual expenditures in the past and as a basis for future projections. The historical numbers would have to be tied to some sort of appropriate index such as number of employees to determine an average cost per employee and then project forward based on expected increases in the County work force. Other variables should also be considered in the projections such as changes in County services that might result in changes in risk exposures. 34 Harvey M. Rose Accountancy Corporation General Workers' Liability Compensation a Retained earnings: end of FY 00- 01 $ 2,900 $ 3,600 b Revenues from charges to departments FY 01- 02 3,700 4,200 c Total funds available ( a+ b) 6,600 7,800 • FY 01- 02 Claims pay outs/ legal costs, 2,000 2,600 - FY 01- 02 Third party administrator costs 400 300 FY 01- 02Excess insurance costs 1,500 1,000 FY 01- 02 Staff and administrative costs 150 200 h Total costs FY 01- 02 ( d through g) 4,050 4,100 i Retained earnings: end of FY 01- 02 c- h 2,550 3,700 J Cash reserves on hand 6,600 3,300 k Future Year Liabilities 6,500 4,200 Fiscal Year General Liability Workers' Compensation 1995- 96 1,500 1,600 1996- 97 1,700 1,500 1997- 98 1,800 1,900 1998- 99 2,000 1,900 1999- 00 2,700 2,500 2000- 01 2,500 2,700 Fleet Management Fund Section 4: Internal Service Funds Fleet management fund information in the budget document is less comprehensive than risk management fund information. The fleet management function is a function of the General Services Department and is included in that department's budget. Because the department covers so many functions, such as capital projects, communications, purchasing, airports and parks and grounds, and because the expenditure level is lower, the level of reporting is lower for fleet management than risk management. In spite of its smaller size, similar information should be presented in the budget as discussed for risk management. The budget document should include cash on reserve ( approximately $ 3.7 million as of June 30, 2001), annual revenues and historical and five year projected fleet maintenance and replacement costs. Unlike insurance costs, the County would not have future vehicle maintenance and replacement obligations if it went out of business but some reserve level is appropriate to cover unanticipated expenses such as replacement of critically needed vehicles before their expected replacement dates due to accident or unplanned repair costs exceeding the vehicle's value. This information and reserve options would assist the Board of Supervisors in making decisions on funding levels and appropriate charges to customer departments for this fund. Recommendations It is recommended that the Board of Supervisors: R4.1 Adopt a policy establishing reserve levels for the three components of the risk management fund and the total fleet management fund based on information provided by the Chief Administrative Officer including: ( a) a year by year schedule of all known and estimated liabilities for the health benefits, workers' compensation and general liability funds; and, ( b) the amount needed to fund reserves at alternative confidence levels ranging from " pay as you go" to fully funded; R4.2 Require the Chief Administrative Officer to provide details on historical and projected claims payment expenditures each year in the proposed budget for all internal service funds, with the three components of the risk management fund presented separately; R4.3 Require the Chief Administrative Officer to clearly present the amounts in reserve each year by each internal service fund or component thereof; R4.4 Require the Chief Administrative Officer to provide more detail on the approximately $ 17 million in annual Services and Supplies expenditures for the risk management fund and each of its component funds. 35 Harvey M. Rose Accountancy Corporation Costs and Benefits There would be no new direct costs associated with the above recommendations. Benefits would include better information about internal service fund funding levels provided to the Board of Supervisors and the public and, potentially, one time funds available for other purposes if the Board should choose to reduce reserve levels allocated to the funds. Responses Required for Findings F4.1 through F4.4 El Dorado County Board of Supervisors Responses Required for Recommendations R4.1 through R4.4 El |
| PDI.Date | 2002 |
| PDI.Date.Issued | 2002 |
| PDI.Title | Final Report. 2001-2002. |
| OCLC number | 144544458 |
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