At Tuesday’s first-quarter budget review, the Board of Supervisors heard some unwelcome news about an addition to the deficit, while another attention-grabbing piece of information appeared to fizzle into mundane legitimacy.
CEO Darcie Antle painted a grim financial picture, saying, “I am very concerned about the fiscal sustainability of the county,” with the cost of goods, labor and services rising as revenue from all sources goes down. “One payroll every two weeks is $3 million,” she reminded the Board. She added that over the weekend, Doris Rentschler, the Executive Director of the Mendocino County Employee Retirement Association (MCERA), told her that, “There will be a $3 million impact to retirement for fiscal year 24/25 due to salary increases.” This, she said, will raise the deficit, even as labor negotiations drag on.
According to Rentschler, “the county’s expected contributions (to the retirement fund) are estimated at $34.8 million, an increase of $2.88 million over this year’s expected contributions.” This is due to changes in actuarial assumptions and the salary increases of employees who were either promoted or who received market adjustments for a negotiated minimum wage increase.
If the number of employees contributing a percentage of their checks to the retirement agency shrinks too much, the county will have to pay even more, to cover the unfunded retirement liability for past employees. Current employees only pay into their own retirement accounts.
Supervisor Dan Gjerde asked Antle and Deputy CEO Tim Hallman some questions about the labor contracts. “At the time of budget adoption, the budget assumed a growth in payroll and salary and benefits of nearly 9%,” he said. “Would that cover the contracts that are under negotiation today, or would that not be sufficient to cover the contracts that are under negotiation right now?”
“That was for covering our bases at that time,” Hallman said. “It was not projecting out any increases.”
Gjerde persisted: “If there are labor contracts adopted that increase salaries, even by one penny, it would be above what was assumed in the adopted budget.”
Antle confirmed, saying, “With labor negotiations, yes. Merits and other regular things that happen throughout the year would have been included.”
The Board agreed to take up the question of forming a citizens’ advisory committee to come up with a definition of market rate wages for county employees.
Acting Auditor Controller Treasurer Tax Collector Sara Pierce gave an update on last week’s startling news of outside bank accounts, telling the Board that they appear to be a legitimate means for county employees to deposit money rather than transporting it from various corners of the county. There is no active auditor on the accounts right now, “so it’s just trying to work through local banks to update signatory authorities,” she explained.
The county is contracted with outside auditor Clifton Larson Allen to complete the audit for fiscal year 21/22, but Pierce said she would like to put out a request for proposals for another firm. The county also has a contract with another auditing firm, Regional Government Services, to go through a backlog of items.
Megan Hunter, Assistant Auditor-Controller, said she doesn’t think her office is being heard. “We send the auditors what they request from us,” she said. “They did ask if we had any new bank accounts, and I did provide them with that information. There are also multiple bank accounts that do not hold public funds, like jail inmate funds…They’re not public funds, so they would not need to be disclosed. We are aware of the bank accounts. I feel like the way it was brought to the public’s attention was more alarming than what I think is necessary before everything is fully investigated. But we have been working diligently with the auditors. We’re not holding any information from them. We provide them with what they request.”
Supervisors also began to wonder about the details of the asset forfeiture funds. And they relented on one unpopular suggestion, agreeing to maintain a million-dollar carbon reduction fund that they had set aside from the PG&E settlement.
However, they let another million they had set aside for emergency medical services go into a designated reserve. Supervisor Ted Williams called it “a soft reallocation,” and said he was dubious about using one-time funds to solve a structural financial problem. But County Counsel Christian Curtis said he expected the county would have to spend tens of thousands of dollars of research to find out if a plan to form a joint powers authority for emergency services would even be viable.
Three employees are spending half their time trying to figure out how to improve the way things are done at the county. It’s called the Golden Gate Bridge Initiative, because they expect that, like painting the iconic bridge, the work will be ongoing. They currently have 73 items on their list. The Board voted unanimously to ask Antle to review the list and see if the analysts in her office could take up any of the items that are not currently being implemented. She’ll also come back with an outline of a job description for a consultant who could help with cost efficiencies
Chief Probation Officer Izen Locateli said he gets more done now than he did in 2017, when he had a bigger budget, because the department has stability. “It is replicable throughout the county, that you can create efficiencies and effectiveness,” he said. “But you have mass amounts of vacancies in your department heads and your leadership throughout the county. So how do you get anything accomplished when every year you have a new director or a new chief or a new boss? Leadership is something that you hope to grow internally, and that’s how we hope as a county that we’re going to get forward. But we have to prioritize.”