Proposed 2025-26 Budget

2025-26 Risk Management Fund Claim Reserves

Overall Budget Summary

The Personnel and Risk Management Proposed Budget recommends increasing staffing to 46.0 full-time equivalent (FTE) positions, including negotiated salary and benefit adjustments. Appropriations total $77,128,895, funded by revenues of $39,266,770, a General Fund contribution of $721,491, and other fund contributions of $37,140,634.

The Personnel Proposed Budget includes total appropriations of $ 4,319,224, funded by revenues of $3,525,206 and a General Fund contribution of $794,018. The Budget reflects an increase in staffing to 33.0 FTE positions, resulting from the intra-fund transfer of 3.0 FTE Personnel Technicians from the Human Services Department (HSD), with no additional impact to the General Fund. Total revenues decreased by $96,053 primarily due to a $112,361 decrease in charges for personnel services provided to other County departments. Total expenditures decreased by $73,250 largely from a $343,833 decrease in intrafund transfers, which is offset by a $109,415 increase in negotiated salary and benefit adjustments, $136,235 increase in technology support charges related to the implementation of the County’s new Human Resource and Payroll System, and $152,589 increase from a change in facility charges to properly reflect the cost of facility services and utilities.

The Risk Management Proposed Budget includes total appropriations of $72,809,672, funded by revenues of $35,741,564 and other fund contributions of $37,140,634, with a General Fund contribution credit of $72,527 to meet the department-wide target. The result would provide for $29,209,309 in reserves which is below the recommended funding level of 70-75%, with Workers Compensation at 45% or $17,290,481 and Liability and Property at 44% or $9,715,294. Total revenues decreased by $6,495,741 largely from a $10,046,278 decrease in operating transfers in from a one-time prior-year loan from the General Fund and $2,000,000 decrease in intrafund transfers in from the end of recording other department insurance costs, which is offset by a $5,201,505 increase in charges for services from departments for liability and insurance costs. Total expenditures increased by $1,770,982 largely from a $2,185,950 increase in liability costs, $1,500,000 increase in medical expenses, $1,160,000 increase in excess and property insurances, and $171,363 increase in technology support charges related to the implementation of the County’s new Human Resource and Payroll System. This increase was offset by a $3,616,373 decrease in other insurance costs from reallocating $4,709,492 in departmental costs, which were incorrectly reflected in the past as a cost of the Personnel Department, to the General County Revenues budget.

Human Capital Management (HCM) Implementation: In partnership with the Auditor-Controller-Treasurer-Tax Collector and supported by the Information Services Department, Personnel is implementing a new HCM (Workday) to automate workflows and streamline county-wide personnel systems as well as improve payroll systems. The budget maintains $200,000 for short-term extra help staffing to support implementation, maintenance, and upgrades of the HCM. The continued use of extra help resources allows the County to manage workload fluctuations without increasing the number of permanent positions. This approach supports timely system updates, helps reduce payroll processing risks, and ensures compliance with evolving payroll requirements while minimizing long-term costs.

Collective Bargaining Agreements: Recent state legislation requires the County to reopen collective bargaining agreements and modify benefits at its own cost, removing previous exemptions. These changes increase administrative burdens, legal expenses, and financial obligations beyond the County’s control. While the exact fiscal impact for 2024-25 and 2025-26 remains uncertain, the new requirements will divert staff resources, delay negotiations, and require budget reallocations that may affect service delivery. Over the long-term, continued state mandates could create financial instability, strain staff capacity, and limit the County’s ability to manage labor-related costs. The County will need to plan proactively to mitigate these risks.

Expanded Bargaining Requirements: Recent legislative changes and Public Employment Relations Board (PERB) decisions have expanded the scope of "meet and confer" requirements, limiting the County’s ability to implement productivity improvements, cost-saving measures, and structural changes without prolonged negotiations. These expanded bargaining requirements will increase administrative burdens, delay operational efficiencies, and may lead to additional staffing costs and mediation expenses in 2024-25 and 2025-26. Over time, expanded bargaining requirements could drive up personnel costs, reduce operational flexibility, and hinder cost-saving initiatives, creating long-term pressure on County finances. The County must plan proactively to maintain operational efficiency and fiscal sustainability.

Rising Insurance Costs: Rapidly rising costs for liability claims and insurance costs are straining the County’s budget, requiring adjustments to protect assets, employees, and service levels. Expenses have increased from $8.5 million in 2023-24 to $10.5 million in 2024-25, with 2025-26 estimates ranging from $12 million to $13 million. These escalating costs may necessitate funding reallocations, delaying initiatives, operational improvements, or staffing investments and continue to constrain the County from reaching its minimum 70% funding target for claims. Without intervention, continued increases could create long-term budget constraints, making cost-mitigation strategies essential to maintaining financial sustainability.