June 16, 2008

Fresno Chamber Releases 2007-2008 County Budget Task Force Findings and Recommendations

Task Force Members

- Ray Dunn, Chair, RWD Consulting
- Ruth Evans, Evans HR Company
- Susan Ryan, Kaiser Permanente
- Debbie Hunsaker, Alert-O-Lite
- Amy Huerta, Fresno Chamber

One of the goals of the Chamber’s Governmental Affairs Council (GAC) was to review the Fresno County budget. A task force for this purpose was formed in late February with the goal of reviewing the budget and preparing a list of recommendations for the County’s consideration in this budget year as well as next year. The committee members consisted of a cross section of representatives from public and private companies that operate in the Fresno County area and beyond.

The budget task force began the budget review process on March 1, 2007, as follows:
 

- We had six meetings with CAO Bart Bohn to get a complete understanding of the budget process including: the 5-step process used to allocate revenues, project salary and benefit increases, the spending of one-time dollars, use of realignment dollars, etc. Through this process Bart proved to be very knowledgeable about the budget process.
 

- On April 25, 2007 the committee met with Supervisor, Judy Case and listened to her opinion and recommendations regarding the budget and process.
 

- On May 1, 2007 the committee met with Supervisor Susan Anderson, and followed up with assistant Stan Nass on May 8, 2007. The committee met with Sheriff Mims on two different occasions to discuss the Sheriff’s budget. The Sheriff was very open providing line-item details of her complete budget.
 

- On June 19, 2007 the committee also met with Ralph Jimenez and his staff to discuss the personnel functions of the County budget process, mainly the union negotiating process that is used to determine wage, salary and benefits for County employees. The discussion focused primarily on the union negotiating process, and the process used to determine wage, salary and benefits for County employees.

Throughout all the meetings held, a common theme or pattern started to emerge, a common concern that the fiscal future of Fresno County might be at risk unless there were some major changes in the budgeting process and cost structure. The findings and recommendations listed in this report are for consideration by the Supervisors of Fresno County, the CAO and all County department heads.

General Comments/Budget Process

Findings
 

- Structural organization of the County: Not all department heads report to the CAO, resulting in a lack of consistent direction and accountability
 

- It appears that the current budget process promotes silos rather than a fully integrated process that recognizes the impact a decision in one department has on another; effective two-way communications are missing.
 

- County budget uses one-time dollars for ongoing projects, a procedure that is not fiscally responsible.
 

- County budgets are generated in July each year and are not rolled into a five year forecast to determine future costs of current actions.
 

- Labor costs are the largest component in every department’s budget.
 

- Current and future retirement costs are a major area that needs to be addressed.

Recommendations:
 

- Consider investing in an outside consultant to revamp the budget development process.
 

- Change budget process to zero-based budgeting where all activities must be justified and have appropriate levels of funding; identify real and ongoing revenue for expenses.
 

- The CAO should recommend budgeting parameters to the Board of Supervisors for their review/approval
 

- Project revenue and identify expenditures
 

- Balance budget without using concept of “open” positions
 

- Require consistent process/format for all departments
 

- Use benchmarking as a process to improve the budget process and to compare the budget with other counties in California. Determine which counties in California have the best budgeting process.
 

- Use benchmarking to identify and establish best-practices by department; department heads should take on that task in an effort to streamline operations and control costs while enhancing services.
 

- Eliminate the use of one-time monies to fund ongoing programs or positions.
 

- Combine adult and mental health agencies to enhance services and streamline administration and costs.
 

- Require a 5-year rolling forecast as part of an annual budget, providing visibility of impact of commitments on future budgets. Report to Board of Supervisors quarterly.
 

- Use wage and salary survey from the private sector to determine competitive salaries/wages.
 

- The CAO’s office to project the total revenue for the next budget year and build the budget to that number.
 

- CAO to make recommendations to Supervisors to review/approve actual dollars available for union negotiations
 

- Convert to interest-based (principle-based) negotiations, i.e. identify stakeholders, problems, interests, negotiate for mutual gains; eliminates positional bargaining.

Public Safety/Sheriff’s Budget

Findings

- Personnel costs are 83% of entire budget which is driven by union negotiations
 

- There is an increase of 20% in personnel costs from 2007 to 2008 budget, increasing the Sheriff’s budget by $20 million
 

- Applaud Sheriff’s action to hire outside consultant to analyze and audit her department to establish benchmarks compared to other best-practice sheriff organizations.

Recommendations

- Increase the number of Federal inmates the County can house in jail from current 250. The department is losing $1 million per year in revenues due to a reduction of Federal inmates from 400 to 250 in 2007.
 

- Consider outsourcing medical services, jail services, hospital guard services and physical services; put out for RFP’s.
 

- Hire an analyst specifically for contract oversight and RFP’s.
 

- Develop a 5 year forecast for the Sheriff’s department and update each quarter
 

- Address issues of salary compaction between management and line employees
 

- Implement a streamlined hiring process to allow Sheriff to hire Academy graduates

Personnel Department

Findings
 

- Wage and salary payroll is 40% of County budget
 

- Multiple union contracts are negotiated on an annual basis
 

- Minimum direction from the Board of Supervisors regarding percentage settlement limits for each contract
 

- Contracts settled in 2006/2007 resulted in cost increases of 10% which is far greater than private industry.

Recommendations

- Use competitive wage and salary surveys from both 13-County and local private industry
 

- Consider going to a defined contribution plan vs. defined benefit pension plan to manage future retirement expenses. The majority of the private industry has converted to defined contribution plans to control future costs.
 

- Define clear reporting lines to CAO to ensure/promote accountability, i.e. Personnel reports to CAO; CAO reports to Board. Direction should be established accordingly
 

- Streamline the hiring process to fill open positions more timely and to provide opportunity for Sheriff to hire Academy graduates, competing with Clovis and other entities
 

Negotiations

- Include private sector representation in the negotiation process
 

- Consider a new format for negotiations to provide greater transparency and Supervisor review prior to signing.
 

- Cost out possible scenarios, showing impact for 5 years
 

- Implement interest-based negotiations (principle based)
 

- Negotiate based on actual staffing needs; eliminate approach that you can negotiate higher increase by eliminating planned positions (why are those positions budgeted if not needed?)
 

- Identify issues of equity between small and large represented groups
 

- Consider renegotiating contracts to reduce salary and benefits to a level the County can responsibly support.
- Conduct analyses and address annually: Turnover and compaction between management and line.

July 25, 2007

Fresno Chamber Actively Reviews County Budget

Since the beginning of March a task force made up of Chamber members has been carefully analyzing the Fresno Counties budget. Over this four month period the Chamber has met with the CAO, the Sheriff, the Board of Supervisors and the Personnel Department in order to better understand how our tax dollars are spent and determine what the County can do to make government services more cost effective.

Last week the Chamber drafted a four page recommendation with business strategies on how Fresno County can make better use of tax dollars.

“The county budget task force serves two purposes: first, it provides strategic business recommendations from real business leaders who are experienced in dealing with annual budgets, and second, it lets our elected officials know that we are watching how they spend our tax dollars,” stated Al Smith, President and CEO of the Fresno Chamber.
 

2007/2008 Fresno Chamber County Budget Task Force Recommendations and Findings

Task Force Members
 

Ray Dunn, RWD Consulting, Chair
Ruth Evans, Evans HR Company
Susan Ryan, Kaiser Permanente
Debbie Hunsaker, Alert-O-Lite
Amy Huerta, Greater Fresno Area Chamber of Commerce

Background

One of the goals of the Chamber’s Governmental Affairs Council (GAC) was to review the Fresno County budget. A task force for this purpose was formed in late February with the goal of reviewing the budget and preparing a list of recommendations for the County’s consideration in this budget year as well as next year. The committee members consisted of a cross section of representatives from public and private companies that operate in the Fresno County area and beyond.

The budget task force began the budget review process on March 1, 2007, as follows:
 

- We had six meetings with CAO Bart Bohn to get a complete understanding of the budget process including: the 5-step process used to allocate revenues, project salary and benefit increases, the spending of one-time dollars, use of realignment dollars, etc. Through this process Bart proved to be very knowledgeable about the budget process.
 

- On April 25, 2007 the committee met with Supervisor, Judy Case and listened to her opinion and recommendations regarding the budget and process.
 

- On May 1, 2007 the committee met with Supervisor Susan Anderson, and followed up with assistant Stan Nass on May 8, 2007. The committee met with Sheriff Mims on two different occasions to discuss the Sheriff’s budget. The Sheriff was very open providing line-item details of her complete budget.
 

- On June 19, 2007 the committee also met with Ralph Jimenez and his staff to discuss the personnel functions of the County budget process, mainly the union negotiating process that is used to determine wage, salary and benefits for County employees. The discussion focused primarily on the union negotiating process, and the process used to determine wage, salary and benefits for County employees.

Throughout all the meetings held, a common theme or pattern started to emerge, a common concern that the fiscal future of Fresno County might be at risk unless there were some major changes in the budgeting process and cost structure. The findings and recommendations listed in this report are for consideration by the Supervisors of Fresno County, the CAO and all County department heads.

General Comments/Budget Process

Findings:
 

- Structural organization of the County: Not all department heads report to the CAO, resulting in a lack of consistent direction and accountability
 

- It appears that the current budget process promotes silos rather than a fully integrated process that recognizes the impact a decision in one department has on another; effective two-way communications are missing.
 

- County budget uses one-time dollars for ongoing projects, a procedure that is not fiscally responsible.
 

- County budgets are generated in July each year and are not rolled into a five year forecast to determine future costs of current actions.
 

- Labor costs are the largest component in every department’s budget.
 

- Current and future retirement costs are a major area that needs to be addressed.

Recommendations
 

- Consider investing in an outside consultant to revamp the budget development process.
 

- Change budget process to zero-based budgeting where all activities must be justified and have appropriate levels of funding; identify real and ongoing revenue for expenses.
 

- The CAO should recommend budgeting parameters to the Board of Supervisors for their review/approval
- Project revenue and identify expenditures
 

- Balance budget without using concept of “open” positions
 

- Require consistent process/format for all departments
 

- Use benchmarking as a process to improve the budget process and to compare the budget with other counties in California. Determine which counties in California have the best budgeting process.
 

- Use benchmarking to identify and establish best-practices by department; department heads should take on that task in an effort to streamline operations and control costs while enhancing services.
 

- Eliminate the use of one-time monies to fund ongoing programs or positions.
 

- Combine adult and mental health agencies to enhance services and streamline administration and costs.
 

- Require a 5-year rolling forecast as part of an annual budget, providing visibility of impact of commitments on future budgets. Report to Board of Supervisors quarterly.
 

- Use wage and salary survey from the private sector to determine competitive salaries/wages.
 

- The CAO’s office to project the total revenue for the next budget year and build the budget to that number.
 

- CAO to make recommendations to Supervisors to review/approve actual dollars available for union negotiations
 

- Convert to interest-based (principle-based) negotiations, i.e. identify stakeholders, problems, interests, negotiate for mutual gains; eliminates positional bargaining.

Public Safety/Sheriff’s Budget

Findings:
 

- Personnel costs are 83% of entire budget which is driven by union negotiations
 

- There is an increase of 20% in personnel costs from 2007 to 2008 budget, increasing the Sheriff’s budget by $20 million
 

- Applaud Sheriff’s action to hire outside consultant to analyze and audit her department to establish benchmarks compared to other best-practice sheriff organizations.

Recommendations

- Increase the number of Federal inmates the County can house in jail from current 250. The department is losing $1 million per year in revenues due to a reduction of Federal inmates from 400 to 250 in 2007.
 

- Consider outsourcing medical services, jail services, hospital guard services and physical services; put out for RFP’s.
 

- Hire an analyst specifically for contract oversight and RFP’s.
 

- Develop a 5 year forecast for the Sheriff’s department and update each quarter
 

- Address issues of salary compaction between management and line employees
 

- Implement a streamlined hiring process to allow Sheriff to hire Academy graduates

Personnel Department

Findings

- Wage and salary payroll is 40% of County budget
 

- Multiple union contracts are negotiated on an annual basis
 

- Minimum direction from the Board of Supervisors regarding percentage settlement limits for each contract
 

- Contracts settled in 2006/2007 resulted in cost increases of 10% which is far greater than private industry.

Recommendations
 

- Use competitive wage and salary surveys from both 13-County and local private industry
 

- Consider going to a defined contribution plan vs. defined benefit pension plan to manage future retirement expenses. The majority of the private industry has converted to defined contribution plans to control future costs.
 

- Define clear reporting lines to CAO to ensure/promote accountability, i.e. Personnel reports to CAO; CAO reports to Board. Direction should be established accordingly
 

- Streamline the hiring process to fill open positions more timely and to provide opportunity for Sheriff to hire Academy graduates, competing with Clovis and other entities
 

Negotiations
 

- Include private sector representation in the negotiation process
 

- Consider a new format for negotiations to provide greater transparency and Supervisor review prior to signing.
 

- Cost out possible scenarios, showing impact for 5 years
 

- Implement interest-based negotiations (principle based)
 

- Negotiate based on actual staffing needs; eliminate approach that you can negotiate higher increase by eliminating planned positions (why are those positions budgeted if not needed?)
 

- Identify issues of equity between small and large represented groups
 

- Consider renegotiating contracts to reduce salary and benefits to a level the County can responsibly support.
 

- Conduct analyses and address annually: Turnover and Compaction between management and line.