Mendocino County, California

1. Mendocino County, California * Antonella Demartini PA 730: Managing Budgets In the Public Sector Presentation: May 9, 2011 Final paper: May 18, 2011 * Mendocino County is known for its wine, timber, and beaches.

2. The way to Mendocino County . . . . . . And its supervisory districts.

3. A Snapshot:Mendocino County- • Was established in 1850 when California became a state; • Spans over 2 million acres or 3,500 square miles; • Currently is home to about 93,000 individuals, 70% caucasian, 22% Hispanic, 8% other; • High school drop out rate was 18.9% in 2008. • Displays unemployment rate of 11.7% as of July 2010; • Household median income was $44,645 in 2010; • Median price of homes in 2009 was $268,550; number of homes sold since 2007 is increasing due to low property value;

4. Mendocino County Organizational Chart

5. Mendocino County Mission Statement “The Mendocino County Board of Supervisors’ mission is to create and maintain a responsive and responsible government that enhances the quality of life of the people of Mendocino County. The County’s mission is to deliver services that meet public safety, health, social, cultural, education, transportation, economic, and environmental needs of our communities.” -Adopted by Board of Supervisors on April 19, 1999

6. Mendocino County Budget Cycle March: CEO gives budget instructions to departments based on current mid year budgets, projected revenue & state budget impacts February: CEO analyzes governor’s proposal and reports state budget impacts to BOS; BOS prioritizes and guides CEO to formulate budget April: departments create budget requests for fiscal year and submit them to CEO for review January: state releases Governor’s budget proposal November:budget is published for following fiscal year May: CEO reviews requests and compiles preliminary county budget worksheet; County Finance Team meetings begin; Governor releases revised state budget September-October: CEO and Auditor submit resolution to BOS for adoption of final budget July-August: CEO watches for state and federal budget changes; depending on impacts, CEO can call additional County Finance Team meetings August: BOS holds final budget deliberations via public hearing; CEO presents budget document and BOS takes public input June: CEO presents state budget impacts from Governor’s document on county budget and recommends the budget to the BOS for approval; after public input sessions, BOS approves budget with guidance to CEO for final budget

7. Mendocino County: Recent Budgeting History & Fiscal Reform • In recent years, county has faced lowered revenues due to: • State budget cuts; • Lower property assessment value/reduced property tax growth; • Reduced sales tax; • FY 2007-2008: county reduced operating costs; • FY 2008-2009: county introduced voluntary time off; • FY 2009-2010: county introduced mandatory time off, began layoffs, and consolidated services to create greater efficiencies; • FY 2010-2011: layoffs continue, department budgets are being cut 15%, hiring freezes and salary/benefits increase freezes are being implemented, and unions are being asked to make salary bargaining concessions;

8. Mendocino County Budget Priorities Short term: • To balance the budget for FY 2011-2012 to comply with California Government Code 29009; • To rescue the general fund: • FY 2009-2010, general fund deficit was nearly $3.7 million; • FY 2010-2011, general fund deficit was reduced to nearly $1.4 million; Long term: • To build up general and departmental reserve funds; • To support long-term economic development; • To sustain public service delivery and retain staff, when possible;

18. Mendocino County:Capital Budgeting & Debt • Mendocino County does not have any debt . . . yet! • All reserves were used to balance the budget last year (compensate for the general fund deficit) • Credit rating according to Fitch: downgraded from “A” to “BBB+” • Reliance on internal borrowing and transfers from general fund to pension contributions • Overall tax decline • Limited prospects to grow economy: wine/timber/beaches • Capital projects • Not pursuing new plans because of financial instability • Ongoing or newly completed projects: • 1992- present: Mendocino Town Plan • 2008: Mill Creek Dams project • 2009: Microwave System for sheriff patrol dispatch

19. Mendocino County Reserve Policy: Policy #32 • On March 16, 1999, Mendocino County adopted by minute order Policy #32 which created a General Reserve Fund. Its goals are: • To provide funding for unforseen needs because of an emergency of a non-recurring nature; • To withstand negative changes in the local economy; • To allow budgetary adjustments when revenues are reduced or when expenditures are increased because of the actions of other governmental entities; • To maintain a high credit rating and lower the cost of capital borrowing, indicating sound financial management of county resources; • The minute order stipulates that the fund must maintain a balance equal to 2% of the value of the general fund; • To achieve these goals, Mendocino County established a general reserve from annual contributions from the General Fund and discretionary funds appropriated by the Board of Supervisors; • County departments subsequently created similar reserve policies for individual departments budgets

20. Figure 10: Government Finance Officers Association Rating for Mendocino County Budget

21. Mendocino County Budget: Discussion & Recommendations • Budget process: • Stable, but attention should be focused on creating a debt management plan now that incurring debt is imminent for FY 2011-2012; • Continue to explore creating greater efficiencies across departments; maybe augment the County Finance Team to include citizens • Re-evaluate hiring priorities: sheriff officers, jail keepers (public safety) vs. teachers (education) in light of elevated high school drop-out levels • Overall county expenditure growth is expected because need for public services remains constant, and will grow if unmployment continues to rise; • Something to debate regarding potential future revenues: • Grow tourism opportunities; • Marijuana cultivation – Mendocino’s informal economy for over 30 years . . . • Sheriff officer layoffs from 2010 make enforcement difficult; • In October 2010, MC county sheriff arrested 42 people, gave 9 citations, seized 19,158 plants, confiscated 19 firearms and over $44,000 cash; • If marijuana cultivation remains illegal, the county could fine people for growing marijuana in addition to pressing criminal charges; • If marijuana cultivation becomes legalized (not likely given the political climate and connection to Latin American drug trafficking rings), the county could regulate and tax cultivation

22. Mendocino County: It’s worth the drive! If you visit, you can: • Fish, swim, kayak, hike, ride horses, picnic; • Wine taste, dine, learn to salsa dance; and • Tour the coast by airplane or ride the Skunk Train! Questions?

25. The Mendocino County budget is proficient, but recommendations for improvement include: • Clearly delineating state aid from federal aid; • Providing an overview of: • residential demographics; • community and local economy information to contextualize budget; • Providing information on the general fund deficit that was covered by the general reserve fund and explaining that the county has no legal debt limits/policies because it has no debt other than ongoing pension obligations, currently