Efforts to further examine and tighten county fiscal practices, along with recommendations that could save millions each year based on new a criminal-justice system report, will be crucial in solving a deficit in next year’s budget that could approach $100 million. Those topics and other budget issues are expected be discussed at Tuesday’s (3/29) Board of Supervisors meeting.
Last month, the Executive Office summarized budget challenges for the coming year in the mid-year budget report. Recommendations in a report by international consultant KPMG, which examined the criminal justice system, could generate savings and efficiencies worth millions of dollars each year. Additional savings could stem from a 16-point austerity plan offered by Supervisor Marion Ashley, and from other Board members’ suggestions.
Next year’s projected deficit results largely from about $40 million required to improve inmate health and mental-health care, and a $25 million carryover from the structural deficit contained in this year’s budget. Paying for increased public-safety costs would add roughly $35 million, but revenues are expected to grow by $15 million. The county’s core strategy has been to freeze discretionary general-fund spending at current levels and find savings and efficiencies countywide.
Also under consideration is a realignment of internal funding sources to help cover shortfalls. Examples could include departments shifting the use of money from various sources to maximize the use of non-general fund dollars. Such shifting could help cover increased detention-health costs and allow departments to utilize restricted funds for purposes that not only are appropriate, but that also reduce departments’ need for general-fund dollars.
In addition to examining the justice system, KPMG reviewed the practices of county internal service funds – departments that operate based on rates charged for services they provide to other county departments. Staff has recommended that the Board also hire KPMG to strategically review other county operations for potential cost savings.
In its report on the county justice system, KPMG reviewed operations and practices within the four county departments in the system: the Sheriff’s Department, District Attorney, Probation Department and Public Defender. When fully implemented, the report’s recommendation could carry tens of millions of dollars each year in savings and efficiencies, and institute greater use of data-based decisions to improve operations system-wide, according to the KPMG report.
The total potential savings could not be pinpointed because that number depends on variables such as implementing operational changes in multiple departments, synchronizing changes in one department with the next, and because some modifications might involve labor discussions.
Some of the tactics and techniques suggested in the justice-system report already exist but could be expanded. Others would have to be evaluated further and added over the three years required to fully implement the recommendations. The Board is scheduled to consider the report Tuesday and discuss a proposed contract for up to $15.7 million that would keep KPMG in Riverside County for two years to implement the report’s recommendations. The company also would help embed changes to help sustain them into the future.
On the expense side, the report notes that instituting greater use of evidence-based and data-driven decisions will require multi-million dollar investments in technology over the next five years or more.
On Tuesday, the Board also will consider a recommendation to have KPMG conduct a countywide strategic review to identify potential savings and efficiencies. The cost of that effort, as recommended, would be an amount not to exceed $2.7 million.
With KPMG, the county is continuing its practice of engaging recognized experts to assess county operations and institute cost savings, best practices, and advanced technologies. Several years ago, the county hospital was losing $50 million a year. But after engaging Huron Consulting to assess the hospital and implement the company’s recommendations, the county completely reorganized hospital operations and its leadership. The hospital finished last year with a cash balance.
“We know clearly that the county is staring into a dangerous budget hole in the coming year,” Executive Officer Jay Orr said. “We must take decisive steps to close that gap and consider guidance from international experts.”
The KPMG report and other related Board agenda items are available on the current Board of Supervisors agenda at http://rivcocob.org/agenda/2016/03_29_16.htm.