Refocused our County finances to fund
public safety as a top priority. The
Sheriffs' Department and District Attorney's office are cornerstones to this
Addressing and funding our Other Post
Employment Benefit (OPEB) liability, which was $2.6 billion when I joined the
Board and is now under $800 million.
Stopped depending on County reserves
to balance our budget and have rebuilt our reserves with new policies to
our fifth structurally balanced budget in a row and increased reserves of $220
million. This positions us well to achieve long term fiscal sustainability
for the benefit of taxpayers.
Grown from a
declining AA rating to a glowing AAA credit rating from Standard &
Poor's. We worked hard to achieve this
and there is no higher rating available.
Adopted a balanced County budget in excess of $3
billion for 2015/16
Awarded the Distinguished Budget Presentation
Award for the fifth year in a row
County AAA bond rating affirmed by Standard
& Poor’s, its highest rating. This rating indicates a stable financial
outlook of the county’s financial operations and our strong reserve levels.
Refunded $55.6 million of existing County debt
resulting in a net present value (NPV) savings of $4.5 million, or 8.17%.
Received Standard & Poor’s highest pool
credit quality rating for the County’s investment program, AAA, making it a
total eight (8) years in a row we’ve consistently maintained such rating.
Over the recent years of recession, the
county experienced significant reductions in assessed valuation and property
tax revenues compared to earlier periods of robust growth. Starting in 2008 and lasting through 2012,
Contra Costa County revenue from property taxes declined by over 11%.
In response, the county drastically cut
expenditure growth, reduced the workforce, and lowered its Other
Post-Employment Benefits(OPEB) liabilities.
As a result of these long-term restructuring actions, Standard and Poor’s
Ratings Service (S&P) upgraded the county’s long-term credit rating two
notches from AA to AAA, the highest possible credit rating. Only six California counties received this
AAA rating from S&P in 2014. In
addition, S & P upgraded the county’s pension obligation bonds and lease
revenue bonds two notches from AA- to AA+.
In their credit report announcing the
county’s upgrade, S&P cited very strong management, budget flexibility,
financial policies and the county’s location within the very strong Bay Area
economy as key factors supporting the rating levels.
Contra Costa County is just now
recovering from the ‘great recession’ but continues to closely manage its
financial recovery. Although property
tax revenues are now returning to pre-recession levels, the total net increase
in property tax revenues over the past six years is only 2.32%.
In spite of that the County has/is:
to fund our Other Post-Employment Benefits (OPEB) obligation at $20 million per
the GFOA award for our budget presentation indicating that our budget documents
provide a compressive (and more importantly, readable and understandable)
statement of our commitment to financial stability of the County.
Labor agreements for the majority of Bargaining Units which will increase
salaries by approximately 7.0% over the next two years.
balanced the General Fund budget for each of the past three years by
emphasizing very strong management, budget flexibility and financial policies.
with the Community Corrections Partnership (CCP) to achieve a Public Safety
Realignment Plan under AB 109 that allows us to responsibly deal with the
transfer of State Prisoners to the County.
to develop options for the delivery of health services to all our communities
while reducing dependency on the General Fund.
allocation of funds to address the backlog of $270 million deferred maintenance
on our County buildings and infrastructure.
Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Distinguished Budget Presentation Award to the county in recognition
of its Recommended Budget. This was the county’s third time to receive the
award. To receive the award, the county had to satisfy recognized guidelines
for effective budget presentation. The guidelines are designed to assess how
well an entity’s budget serves as a policy document, financial plan,
operational guide, and communications device.
December 20th, we learned that Standard and Poor’s had up graded us
to AAA which is defined as "AAA" Extremely strong capacity to meet
financial commitments. And which is the Highest
rating that they give. Currently only one other California
County has the AAA rating (San Diego).
rating is important to show the public and potential investors that the County
is well managed, has been conservative in its financial affairs, and has the
capacity to meet its ongoing financial commitments. It is a credit not only to
County staff but also the leadership of the County Board in managing the last
few years of economic turmoil and budget reductions. Thanks to all of you for
your leadership. Additionally, we have increased our reserves and have begun to
address deferred maintenance.
OPEB Liability – In 2006 total
liability for Health Insurance was $2.57 Billion. By eliminating retiree health
insurance for new hires, capping current County contribution for existing
Employees, and contribution $20 million per year into a Retiree Health Care
Trust Fund the Board of Supervisors has been able to reduce this liability to
under $987 million, a decline of over 60% in the liability. More importantly
the Board has put in place a plan that will completely eliminate the liability
over the next several years.
Pensions - Even before the
dramatic decline of the Market over the past 12 months, our pension obligation
for next year (2012/13) was already scheduled to increase by an additional $20
Million. CCCERA‘s (the Pension Board)
return for 2011 was 2.7%, far less than the 7.75% assumed rate of return. This
is likely to mean additional pension increases by the County for the next
CalPERS also did not meet its assumed rate of
return of 7.75%, achieving only a return of 1.1%. CalPERS pension fund has only
earned 3.41% annually on the average in the past five years; 5.36% in the last
10 years; and only 6.97% in the last 15 years. CalPERS is currently funded at
Property Tax Revenues - Our
Property Tax revenues have fallen for three years in a row (09/10 – 7.2%)
(10/11 – 3.38%) and (11/12 – 0.49%) (Total reduction in three years = 11.07%)
This has never happened before; during the Great Depression there were only two
years in which the Property Tax Revenues were negative. Our optimistic
projection for 2012/13 is no further decline, but a zero increase in Property
Infrastructure needs – The County
has identified close to $100 million in building maintenance and repairs that
will be necessary to maintain our aging infrastructure over the next decade.
The 2012/13 budget starts to address this need by setting aside $5 million for
immediate repair of some of these structures (Orin Allen Youth Facility in
Byron and the Finance Building in Martinez).
Reserves - Although we continue to
meet the Board of Supervisors Policy of keeping our reserves at the 10%
requirement, as our budgets have shrunk, so has the actual dollar amount of
Reserves (10% of a smaller number) and what remains is necessary to pay bills
as they come due (cash flow) Policy is for 10% of Total Fund Balance and 5% of
Unreserved Fund Balance. Unreserved Fund Balance is at $140.5 Million (9.4% of
General Fund) at the end of 10/11.
As of June 30, 2011 Unrestricted Fund Balance as
a % of Revenue was $122.6 Million or 11% and Total Fund Balance as a % of
General Fund Revenues was $142.7 Million or 12.8%. (General Fund was
$1,211,651,000) ($1.2 Billion).
Real Estate- 60% of California
sales are “stressed properties” this means one more year of flat prices before
we expect to see the market start to recover and then likely only 2% per year.
In Contra Costa County the median home price in 2011 was $240,000. This
represents a decline of 56.4% since 2007 when the median home price was