Edward Fitzgerald

COUNT GA Y O O F H O A H Y I U O Cuyahoga County Executive C C U O I Y H A O H F O O G A Y Edward FitzGerald T C N O U Cuyahoga County Fiscal Officer Wade Steen, CPA Cuyahoga County Executive Fiscal Office Office of Budget & Management Budget Transmittal Letter Cuyahoga County continues to live within its means and invest in what matters to satisfy the needs of our community while contending with challenges including: uncertain economic conditions, substantial reductions in State assistance and increased demand for vital County services. The goal of the 2012 – 2013 operating budget plan is to maintain a solid financial foundation that is essential to all services and functions that the County provides, especially since rev- enues available for services will remain flat in 2012. The Budget Plan for the next biennium is balanced in its programmatic and financial components. The next budget biennium will challenge us to explore new ways to maintain critical County services while imple- menting a more strategic approach to service delivery. The primary challenge facing Cuyahoga County, as well as the region remains enhancing and creating economic development opportunities that create jobs. Cuyahoga County will continue to re-evaluate its core mission and define its guiding principles and departmental boundaries by collectively evaluating and measuring program performance and outcomes. The values that guided the development of the 2012-2013 budget are: ¾ Improve operational efficiency, remove redundant activities and reduce costs ¾ Encourage opportunity and strengthen our economy ¾ Be excellent stewards of county assets ¾ Improve coordination and promote innovation ¾ Citizens, especially seniors, unable to help themselves will receive help ¾ Citizens will have access to resources needed to be skilled and productive ¾ Our citizens will be healthy ¾ Our children will be well cared for and safe ¾ Our County will be a safe place to live and raise a family ¾ We will sustain our natural resources ¾ Enforcement of laws will be fair and timely There were many changes to this budget development process including new requirements within the County Charter and the adoption of the County’s first biennial budget by County Council. This new era for the County has created opportunities to change the way budgets have been developed in the past. The Budget adopted by Council is a two year operating plan that will identify different and better ways of using our resources to maintain the mission and values of Cuyahoga County. Developing an operating plan that is fiscally sustainable over the long term is our top priority. The objectives of the 2012-2013 operating budget plan include: ¾ Balancing estimated resources with programmatic expenditures ¾ Addressing structural imbalances in both the General Fund and HHS Levy Fund ¾ Contending with lower levels of state and federal revenue for the foreseeable future ¾ Incorporating impacts of organizational changes recommended by the Executive ¾ Allocating resources to fund priorities and strategic initiatives ¾ Creating a formal biennial budget development process for 2012 - 2013 ¾ Submission of a five year capital improvement plan that identifies priority investments The County’s 2012-2013 General Fund budget is $701.5 million for the next biennium and includes the im- pact of reductions in expenditures and staffing levels that were implemented in 2011. When comparing this Budget to previous Budgets we compare our plan for 2012-2013 with the operating budget for 2010, the last year under the former Commissioner form of governance. The changes implemented in 2011 and the 1 Budget Transmittal Letter associated savings have been carried through into the 2012-2013 proposed biennial budget. The General Fund operating budget of $353.4 million for 2012 represents a 3.1% reduction in comparable ongoing operations since 2010. The operating budget for 2013 of $348.1 million continues to decrease ongoing operating expenditures of 0.5% from 2012. The Health & Human Services Levy Fund budget of $440.5 million includes stable levels of support for the County’s critical Health and Human Service programs. The $225.7 million in local funding of human services in 2012 includes continues funding for public assistance programs and health & safety programs. The 2013 level of funding of $214.8 million maintains consistency in support despite the loss of State revenue to the Levy Fund. The decrease in expended Levy dollars is the result of using additional reserve in the public assistance funds to offset the required subsidy used to fund human service budgets. County resources have been reduced over the past several years but the demand for core services has not. Like other local governments Cuyahoga County’s revenue streams are sensitive to economic conditions. Dur- ing the most recent recessionary period the County’s General Fund revenue base decreased by over $46 million or 12.6% compared to the pre-recessionary level. Over the past year some revenue sources such as sales tax have grown modestly in comparison to the prior year levels. Even with this growth collections from sales tax have not recovered to the peak level in 2008 when inflation is taken into account. The depth of the economic down turn required the State of Ohio to reduce its support to local governments, including Cuyahoga County, to balance its budget. The revenue estimates used to prepare the County’s budget for 2012-2013 include the impacts of State revenue cuts that reduce prior levels of support to the General Fund and other county funds by over $71 million throughout the 2012-2013 budget period. The majority of the loss is focused in the General Fund ($33.5 million) and the Health & Human Services Levy Fund ($38.4 million) over the next two years and is assumed to remain in place as permanently lower levels of funding. As a result of the declining revenue trends and cuts in State assistance the County has become more reliant on a few major sources including sales tax and property tax. In 2008 sales tax and property tax collections accounted for about 54% of general fund revenue and by 2011 these two sources account for 60% of operating revenue. This decrease in revenue diversification can pose a weakness for long-term growth if the other sources do not increase in the future and round out the available revenue for funding operations. The savings realized during 2011 as a result of reorganization, right-sizing, and operational changes have been carried into the 2012-2013 proposed operating budget. A comparison can be made by assuming the 2010 actual level of General Fund expenditures (less one-time expenses) is used as a baseline for the previous structure of government. In 2010 ongoing General Fund expenditures were $296.7 million and now stand at $285.9 million in the 2012 budget. For agency budgets that are now under the direction of the County Executive the levels of ongoing operating expenditures have decreased by $8.2 million or 5.8% in 2012 as compared to that operational group in 2010. These savings are net of one-time expenditures and transfers to other funds and projects (Medical Mart). On an All Funds basis the decrease in ongoing operating expenses is 4.0 % or $50.7 million in 2012. 2 Budget Transmittal Letter Staffing levels declined on a County-wide basis. Staffing levels in agencies that are under the County Executive had declined 7.6% by the end of 2011. This reduction in staff results in net annual budgetary savings of approximately $22.4 million related to approximately 385 staffing cuts that have been achieved through layoffs, terminations, retirements and resignations. Most of the positions eliminated will not be filled and the savings attributable to these staffing reductions are carried through the 2012 and 2013 budgets. The proposed 2012 budget further reduces County Executive agency staffing levels by another 48 positions. The budgeted staffing level is maintained at this lower level in 2013. On a county-wide basis levels of staffing under the new form of government is approximately 3% lower than the base level in 2010. The operational review of the staffing levels included in agency budgets is ongoing and additional changes will be implemented in addition to the reductions already achieved based on this review process. Use of other efficiencies to maintain balance include organizational restructuring and streamlining operations. The change in governance structure approved by the voters of Cuyahoga County in 2009 and manifested with the election of the County’s first Executive in 2010 has provided the opportunity to make wide reaching changes to the way resources are allocated across County programs, offices and departments. The portion of the County budget and staff under direction of the County Executive is now over 60%. This realignment has enabled restructuring of major functions of the County that resulted in substantial savings and reduces staffing levels. Budgetary savings from organizational consolidations in fiscal management and public works that were initiated in 2011 are carried into the next biennium. The alignment of the County’s fiscal opera- tion into a unified management structure alone will result in savings of approximately $5.5 million. Other reorganizations in Justice Services, Public Works and Human Resources will not only reduce costs but will increase productivity and improve the management of these functions of county government. The proposed spending plan also incorporates the cost savings related to supporting operations. The restructuring of em- ployee health care plans will allow the County to provide sustainable health care to employees and reduce the County’s spending on health care in the next biennium by almost $5 million a year which will help offset the inflationary impacts related to this expense.

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