Well, good afternoon, everyone.

I'd like to welcome you to the Alameda County Board of Supervisors Budget Workshop Special Meeting, budget work group special meeting.

The budget work group welcomes you to our meeting.

And members of the public are appreciated for their participation.

In-person and remote participation is allowed at this meeting.

I'll uh ask the clerk to provide brief instructions for those participating remotely.

Thank you.

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Thank you.

Thank you very much.

And if you are in person, we'd ask that you fill out a speaker slip with the clerk.

And um, we do have item four is for public comment.

So we welcome you to observe the meeting until that point in which time you can make public comment.

I will note that uh we uh welcome you, and I'll start by saying uh I am Alameda County Supervisor from District One, David Halbert.

I'll let my colleague introduce herself.

Good afternoon.

I'm Lena Tam, Al May County Supervisor for District Three.

And we also have our county administrator, and I think we'll introduce staff.

Welcome and introductions is next.

Supervise um county administrator, Susan Moraneshi.

There, there you go.

Uh Rasley Today with the County Administrator's Office.

Amy Shraga with the county administrator's office LD Lewis with the Alameda County District Attorney's Office.

I'm here for District Attorney Ursula Jones Dixon.

Uh Brian Ford, Chief Probation Officer.

Kimberly Gaseray, Director GSA.

Daniel O'Dessenberg, Public Works Director.

Andrea Ford, Director of the Social Services Agency.

Well, we have Jason and Ryan will introduce you in just a little bit.

So we have special guests to remain anonymous for now.

But we're going to go right into a PowerPoint presentation, a special presentation of economic and state budget outlook.

Susan Thank you.

At our work group today, we're going to spend some time talking about the economic outlook as well as some updates on state and federal budget.

And as Supervisor Halbert mentioned, we're joined by a couple of guests from the legislative analysts' office who we will introduce a little bit later to take a deeper dive into some of the issues that we are facing at the state.

And then that will be followed by our own updates on the county budget.

So I'm going to turn it over to Amy Schrego to present the economic outlook and state and federal update.

Good afternoon, everyone.

So just quick uh quick overview of what we're going to review today, as Susan said, and I'm going to start with economic updates, state and federal updates, and then turn it over to our special guests.

So this is a snapshot of Alameda County's unemployment rate going back to July 2019 and pre-pandemic.

As you can see, we had you know, obviously a uh peak of 14% in April of 2020, and it's steadily come down.

And um, you know, uh been a little bit up and down to where we are February 2026 is 4.5%.

The gap in data you see there is October 2025 when the government federal government was shut down and no data was reported.

Um a few key things uh as it relates to our current um job market, the Federal Reserve continues to warn about elevated valuations of um the tech industry, and it could result in losses or a market crash as economic growth slows.

Um the pivot to AI restructuring of the companies and automation continues to drive cutbacks in the technology center, and we continue to see more and more layoff announcements in that sector.

Um here is a snapshot of our real estate trends within our county, which remains one of our most important local economic indicators according to the uh California Association of Realtors in February, the median price in the county was 1.3 million dollars, which is 16% increase from January but flat from a year ago.

And February home sales are up 34% compared to January, but down 2% from a year ago.

And uh the rate of unsold inventory in uh is down 11% compared to January and down 17% compared to a year ago.

Median time on the market was 12 days for the month of February, which is down 30% from the previous month, but an increase of about 9% from a year ago.

Overall, low inventory continues to keep prices high in our area and out of reach for many people trying to enter the market.

Foreclosure filings are up 32% year over year in January 2026, marking the 11th straight month of foreclosure activity rising, uh though overall the uh levels remain well below their historic peaks.

Just as a point of reference, at the peak of the great recession, more than 4% of mortgages were in foreclosure.

Today it's less than 0.5%.

I know we're all getting used to our uh pressure wheel, just a refresher.

Uh, the counties face various pressures, sometimes competing with one another with for limited resources.

Illustrated here are just some of the financial and policy pressures counties face, including our own county, um, including rising costs and increased service demands paired with unfunded mandates and the policy pressures, including changing federal priorities and limited ability to raise revenues.

Um as a reminder, uh two-thirds of counties' budgets come from state and federal resources.

So now on to our federal and state budget update.

Under current law, the president must submit the budget request between the first Monday in January and the first Monday in February.

On April 3rd, the White House released the president's budget for FY27, outlining the administration's proposals for budgetary spending for the fiscal year that begins October 1st, 2026.

The president's budget requested 10% cut of non-defense spending amounting to 73 billion dollars.

It also includes a 44% increase in defense spending, which is a total of 1.5 trillion dollars.

The proposed budget reduces funding for most departments and programs.

However, it does include large increases in funding for veterans care, census administration, and anti-fraud fraud programs.

It also includes funding to reorganize the Department of Agriculture, the Department of Health and Human Services, and notably FY27 will be the first year where funding from the bipartisan infrastructure bill will no longer be in effect and infrastructure will be cut unless they restore funding in the final budget.

The budget um the budget contains uh the final budget would include bill language for all 12 annual spending bills for Congress to consider.

Um, but it is extremely unlikely to be enacted in its current form.

And as we all know, the president's budget is just a reflection of what their prior what their priorities are, and very rarely what Congress ends up taking up looks uh looks like what the president has proposed.

The next step over the House and Senate budget committees to develop and report on their budget resolutions, and then the Senate and House Appropriations Committees will allocate funding to federal programs.

Neither the House or the Senate has released their schedules for FY27 spending bills.

Um and ideally the president would sign all 12 spending bills in time for October 1st, but in recent years, the government has struggled to meet that deadline.

Um and instead, the past continuing resolutions or as we've seen, uh, the government shuts down.

In regards to the state budget update, the governor has indicated just this past week that although the general fund revenues are all the this year's revenues continue to come in higher than expected.

His May revise will include additional spending cuts to ensure that budget is balanced in multiple years going forward.

The Senate Democrats have released their 26-27 budget framework.

And which is their priorities, and they they have said that it's responsible budgeting, maintaining essential programs, and improving the state's long-term budget.

The Senate plan does acknowledge the needs associated with HR1, including increased costs for Medi-Cal, as well as support for hospitals and increased county health and human services administrative work.

And the May revises due on or before May 14th.

And as a reminder, the state has to pass their budget by midnight on June 15th.

The legislature does, but we often see many trailer bills after the fact to actually implement the budget.

And just a quick uh overview of the state's budget.

There are three kinds of state funds that account for almost two-thirds of California's budget.

Um federal funds, state general funds, special and state special funds with very uh small amount from bond funds.

And to break that down further, most state revenues come from personal income tax, sales and use tax, and corporate taxes.

And the state budget at four-fifths of the total spending comes as local assistance to K through 12 public schools, community colleges, and um state programs like CalWorks and other essential services.

So as you can see here, almost three in four general fund dollars and special fund dollars support these three categories at the top health and human services, K through 12 and higher education.

And almost 80% of federal uh funds spent through the state budget support health and human services.

So now I'm done.

We can turn it over to our our supervisor Halbert to introduce our next presenters.

Thank you.

Well, it's uh very clear that we are reliant on state and federal funding.

Uh before we go to our special guests, are there any questions about the presentations made thus far?

Okay, well, we will um say we are very fortunate to be joined today by two experts from California's legislative analysts office.

They are an independent, nonpartisan office that provides fiscal and policy advice to the legislature.

They're here to help us better understand the potential impacts of HR one on California and our county, particularly across our health and human services programs.

You just saw how much spending goes to health and human services.

We're going to um be pleased to introduce Johnstant Constanturus.

John Constanturus, a principal fiscal and policy analyst with the LAO.

Again, the legislative analyst office.

Jason's work focuses on some of the most complex and fast moving areas of our health care system.

He covers Medi-Cal, including managed care as well as family health programs, health care affordability, and workforce development.

Today he'll be helping to unpack what HR1 could mean for California's health coverage landscape, access to care, and the workforce that supports it.

Joining him is Ryan Woolsey, a principal fiscal and policy analyst at the LAO.

Ryan specializes in California's core safety net programs, including CalWorks and CalFresh.

His work provides critical insight into how these programs support low-income families and respond to policy changes.

He'll be speaking on how HR1 could affect key support like food assistance and cash aid and what those changes might mean for Californians.

Together, Jason and Ryan bring a deep understanding of how California's health and human services programs are financed, implemented, and experienced on the ground.

We are grateful to have their perspective as we consider the implications of this federal legislation.

Please join me in welcoming Jason and Ryan.

Who wants to go first?

Well, great.

Thank you.

That was a really great introduction.

We we had planned to introduce ourselves, but you did it so well we can kind of uh skip right to the content.

Susan gets all the credit for that.

Alrighty.

Um so um, you know, as as sort of noted, we were asked today to speak about kind of the effects of HR1.

And we really see things at a statewide level.

That's really what our focus is.

But we've there's been a lot of discussions about how this will sort of impact counties.

We have some slides from that, but but are also interested to hear from you as people on the ground, kind of what you're looking at and kind of uh share notes on on kind of how we're thinking about this.

So I think that'll be a very interesting discussion for today.

Um of these buttons, I believe, moves the slide point it at the uh should we just say next slide when we're great, okay, perfect.

Um so uh then this is just if you haven't heard of our office, this is a slide that explains who we are.

It was sort of already described.

We're we're a nonpartisan office.

We we work for the legislature, we work for both houses and and all members of the legislature.

We have analysts covering a variety of topics.

We uh I work on health issues, my colleague works on human service issues, um, and we write a variety of uh budget and policy reports throughout the year.

Those are all available on our website if you're interested in looking through those.

Go ahead for the next slide.

So there are uh key three uh three key things we want to talk about today.

Uh the first is just kind of provide an overview of HR1, uh, just so we're speaking the sort of the same language.

And then we'll talk about some key issues that we sort of see on the state, and then we'll also bring up some key issues that we see on the horizon for counties.

So go ahead to the next slide.

Next slide, please.

Thank you.

So before we get into uh kind of HR1, we we think it's always helpful to kind of start with where were things at before uh the legislation was enacted.

And today we're really going to focus on two key programs that are affected by HR HR1.

The first is Medi-Cal, which is a program I suspect a lot of folks here are familiar with at the at the county level.

Um, but that's really our state Medicaid program.

It it provides uh health coverage for low-income people in the state.

And it's it's covers about a third of Californians, so it's uh it's a fairly sizable program.

And it's funded by a mix of federal, state, and local funds, including from the at the county level.

So it really is a sort of a joint government um program.

And really the important thing to know about Medi-Cal is that in the last 10 years or so, Medi-Cal really had been under on a trajectory of expansion generally, uh, particularly around eligibility and to some extent benefits as well.

Um, and there are a number of federal and state policy changes that that largely drove that.

The most consequential of which was the Affordable Care Act, which was enacted uh several years ago.

The state implemented many of those provisions, and as a result of that, many more uh low-income people who were previously uninsured uh became eligible for Medi-Cal.

Uh the voters have also passed uh some ballot measures that have also increased uh provider rates, uh, most recently proposition 35.

Uh so that that's generally been the been the trend.

Go ahead for the next slide.

Continuing with the current landscape, CalFresh is um the state's primary food assistance program.

And there are about five million people enrolled across the state, um, about 166,000 of those here in Alameda County.

The benefits for CalFresh are entirely supported by federal funds, but the state partners with the federal government and counties to pay for administration in in California.

In recent years, um CalFresh has also grown.

It's less to do with specific uh policy changes.

There were a few things that happened in terms of uh changed benefits and enrollment roles during the pandemic, but by and large, the growth that you see here in enrollment is um the result of existing law and policy.

Next slide, please.

So, how have things changed?

We're in a moment of uh profound change uh with respect to these programs and and uh how they um serve uh people that are enrolled and how the state finances them.

Um the first big change is that the state's fiscal environment has significantly tightened.

Um, the last few state budgets that have been approved have had what we sometimes refer to as budget problems, uh meaning as the budget is introduced, the uh revenues that are projected to be available are less than the projected expenditures, which requires uh the legislature to identify what we call budget solutions or steps to either increase revenues, reduce expenditures, or a combination of both.

Um at this point in time, while there does not appear to be necessarily a big budget problem for the upcoming fiscal year.

When we look into the out years, there are uh projected sizable deficits.

And in fact, there's what we would call a structural deficit, where on an ongoing basis the revenues projected to come in are a bit less than what ongoing expenditures would be.

Um as a way to start addressing this, the state legislature recently adopted some ongoing uh budget solutions in Medi-Cal.

Um we had a situation where in the spring of last year, Medi-Cal spending uh ended up being considerably higher than was originally projected.

And um, as part of addressing that, the legislature introduced some limits on enrollment for undocumented populations.

They reinstated the asset limit, and uh, among other things ended uh supplemental payments for dental providers.

And it's within this context that we of course come to the very significant federal changes that were enacted as part of um HR1 uh signed in July 2025.

Um very significant changes for both uh Medicaid and uh CalFresh eligibility and financing.

Next slide, please.

This table um attempts to briefly summarize the largest um changes that HR1 makes in in Medi-Cal and CalFresh.

This is not an exhaustive list, but we tried to capture the biggest items.

Um we'll go through these briefly.

We'll go deeper on some of them as we as we go through the slides.

Uh, first, in terms of eligibility, we have um a new uh work and community engagement requirement in Medi-Cal.

This is not something that's been done before, um, and an expansion, a significant expansion of an existing work and community engagement requirement in Calfresh.

Um we have more frequent uh renewals or eligibility checks for childless adults in Medi-Cal.

This is a reference to the roughly five million people who gained eligibility as part of the Affordable Care Act in 2014.

And then with respect to non-citizens, we have uh changes, restrictions and eligibility in both Medi-Cal and CalFresh for certain legally present non-citizens, specifically refugees, asylumes, and a few other groups.

When it comes to financing, um, the federal government has reduced its contributions for emergency care and Medi-Cal.

They've reduced their contributions for administrative costs in CalFresh.

They have uh tightened rules around uh provider taxes that California and many other states use to support uh costs in Medicaid.

And um HR1 also introduces um increased federal penalties related to payment errors.

This refers to situations where a benefit received is either uh higher or lower than what uh should have been received under under the law.

And in CalFresh, in particular, this takes the form of a new state sheriff cost where um the state would be required to contribute.

Um next slide.

So drilling down a little more at the at the program level, you know, there's sort of eligibility and financing changes.

So how do each of these things affect Medi-Cal and CalFresh?

So, with regard to Medi-Cal eligibility, the sort of biggest um change that's sort of expected here is a lower Medi-Cal caseload.

And this is primarily due to what would be the new work requirements.

Um, and and uh there's this is largely because there is a portion of that affected population of able-bodied adults that um currently do not work enough hours.

And there's there's research that suggests that work requirements generally uh have do not result in in stimulating more work.

And so you can expect a lot of that population really as a result to lose eligibility and a disenroll.

There also is a potential effect of what we in Sacramento have been calling administrative burden.

These are people who do meet the requirements, but due to the heightened burden of proving that they are eligible uh still kind of end up falling off the program.

And that's a that area is a lot more uncertain.

It depends a lot on how things are implemented at the state and local level.

Considering that, you know, there are a variety of projections you've probably seen around Medi-Cal disenrollments.

Here we we've put the the disenrollment as much as two million people, although the those projections do change over time as we get better data.

But there is a fair amount of uncertainty here.

It could be it could be more, it could be less than that.

So this is an estimate to keep your eye on because you'll you'll likely see this sort of change over time as we as the effects become more known.

There also will be some higher costs for some enrollees.

This is because HR1 requires cost sharing and like co-pays, for example, on uh some Medi-Cal beneficiaries.

And then also not as a result of HR one, but as a result of state policy changes, um uh certain uh immigrant groups also will um have a much more scaled back coverage as a result of uh, for example, uh a freeze on new enrollment and also having to pay premiums.

So again, this is not part of HR1.

Um this is uh something that was enacted by the state to help address the budget problem.

Many people who are affected by this state policy um technically won't necessarily lose all Medi-Cal coverage, they'll still have emergency care coverage, uh, but this means they won't have coverage for things that are outside of emergency care, like primary care, for example.

Next slide.

So the other big effect on Medi-Cal is kind of in the financing area, and um probably the most substantial effect here uh would be on uh what we call provider taxes.

These are certain taxes that are that are charged on health care providers like hospitals and skilled nursing facilities, and uh most states have provider taxes in some form, and they use them generally to help pay for their Medicaid programs.

California is similar to that, it has four provider taxes, but two are particularly large.

One is a specific tax on health plans, that's also known as the MCO tax, and then another one is a tax as a fee on on private hospitals, and largely as a result of um HR one.

The state probably will have to make reductions to um uh these provider taxes.

The way this works is is very technical and fairly complicated.

We don't have time to get into all the mechanics, but this is sort of the overall effect of what these changes will have.

The biggest effect would would probably be on the tax on health plans, also known as the MCO tax.

And that's actually because both because of HR one and a specific uh provision in a recently enacted voter uh initiative called proposition 35.

That that puts additional limits on the MCO tax, and really as a result of that, the state likely would have to notably scale back um the MCO tax.

And what you see here on the graph is our projection of what that would be.

So you can see it going from sort of high billions to almost effectively zero, it'd be in the tens of millions of dollars.

There are some other key changes.

Actually, the slide does uh omit something that is key for counties, so my apologies for that.

There is an additional financing change related to managed care, how much managed care plans can pay uh for services uh in Medi-Cal, and that'll have some impact on county hospitals.

We'll we'll circle back to that a little bit later.

Um, and then there's also uh some changes in federal funding for immigrant services that that also that would result in less federal funding to the state.

Next slide.

Turning back to Calfresh, um, the story with respect to enrollment is um similar to in Medi-Cal.

Um, the expansion of the uh work requirements is expected to result in about 650,000 or so people statewide leaving CalFresh.

But again, just want to emphasize how incredibly uncertain these projections are.

Um, this is really sort of uncertain territory that we're figuring out as we go.

In addition to the work requirement disenrollments, um, we we also um the state is estimating around 72,000 people statewide um could be disenrolled due to um changes in the immigration status definition.

And apologies for that acronym, there's a lot of different acronyms, but this is in reference to the um the the legally present non-citizens that lose eligibility as part of HR1.

In addition to people completely losing eligibility, there are other HR1 changes that that will reduce the benefits, and these actually have already been implemented.

There's a change, quite technical, um, related to how utility costs are incorporated into the benefit calculation that will reduce uh monthly assistance for hundreds of thousands of people statewide.

Next slide, please.

On the financing side, um, as I alluded to earlier, um, depending on what the state's payment error rate is in CalFresh, the state may end up having a share of benefit costs as large as 15%.

Um that translates into about $2 billion annually uh beginning in October 2027.

So trying to reduce uh the payment error rate is an important part of the state's response to HR1.

And then on the administrative side, um the reduction in the federal share of administrative costs effectively increases the state and county shares.

So you can see in the table here, um the county share goes from 15% of CalFresh Admin costs to 22 and a half.

Um the the increase for the state um is going to be about 480 million dollars a year ongoing and about 190 million dollars a year for counties collectively.

Um in Alamina County, this would likely be at least several million dollars a year in increased costs.

Next slide, please.

We'll now move into a little bit less of the description and a little bit more of um some thoughts that we have about some key issues for the state.

Uh next slide, please.

So, how is HR1 affecting the state budget?

Well, right off the bat, we have higher costs in the upcoming budget year.

Um, in total, uh, the governor's budget identifies about one and a half billion dollars in the upcoming 26-27 fiscal year in additional costs related to HR1.

Most of this is in Medi-Cal, um having to do with the changes in uh the federal funding for emergency services.

Um but we also have increased costs, as I mentioned for CalFresh administration.

There's an important nuance that we want to emphasize here when we talk about the impacts of HR1.

When we're building the state budget, there are impacts that are unavoidable in some sense, where the state uh must backfill funds in order for programs to continue to operate.

But then there's a much broader um set of impacts in terms of lost benefits, reduced payments that that the state budget could technically uh try to address, but is not mandated to address.

So the costs I'm talking about on this slide are are really that first-line direct fiscal impact that must be addressed.

And even taking that more restricted uh view of the impacts, um, the these costs are going to grow over time to a few to several billion dollars in the future, although this is this is certainly subject to refinement as time goes on.

Next slide.

So taking a step back from those direct state budget costs, um, overall the impact of HR one to the state as a whole is much higher, likely in the low tens of billions of dollars each year.

Um much of this loss funding is in Medi-Cal.

Um, and there's a very high federal uh matching rate for for the population that's being affected the most.

Um that's raises the question uh can the state uh feasibly backfill this loss funding?

And the short answer to that is is no.

Um in the short run, as as we mentioned, um there is um some increases in in tax revenues that um make things look a little bit better for the 26-27 fiscal year, uh, but it's highly uncertain how long these gains will remain.

And there are um worrying indicators in in particular in the stock market about how long these revenue gains could last, and long term we are projected to have um structural deficits, which you can see here on this chart.

Um we have slightly different projections between our office and the governor's department of finance, but in either case, um tens of billions of dollars of structural deficits going forward.

Next slide.

Now the governor has started to include proposals to um you know address HR1.

And you can expect to see that there probably will be more proposals as time goes on.

Um at the moment, there really are kind of two key kinds of proposals.

The first is um some new proposals to help manage some of those costs we described in the previous slide.

And um we we call those budget solutions because in effect they're proposing to change uh state law to help mitigate, help avoid some of those costs.

And really the big one here is uh reducing coverage for uh certain immigrant groups.

So as we noted in HR1, um some immigrant groups um who previously got sort of full federal funding under HR1 lose uh a lot of that federal funding for comprehensive coverage.

Um and rather than backfilling that, which would which sort of be under current law, the governor proposes to eliminate comprehensive coverage for this new group.

Now they would still be eligible again for emergency only coverage, but that would be a scaled back benefit from what they're currently eligible for.

Uh the governor also proposes uh extending work requirements to uh to for to for certain immigrant groups to cat to um qualify for comprehensive coverage.

This also isn't technically required that comprehensive coverage is only funded by the state, uh, but the governor has chosen to also apply those.

Beyond these sort of budget solutions, the governor also proposes some new uh spending increases uh, particularly for county administrative costs.

At the moment, there's a proposal for uh related to CalFresh administration.

There isn't a proposal yet for Medi-Cal related administrative costs, but the administration has signaled that there could be something in their revision, so that would be something to look out for.

And just to understand this, you know, from the state perspective, uh county administration is very critical from a programmatic perspective, uh, because it that'll be really key to um helping address that administrative burden that we sort of described earlier.

But it's also a key fiscal priority, and that's because of that uh potential penalty from the error rate that we sort of described earlier.

Um those fiscal penalties to the state could be quite a bit larger than sort of the the added, you know, sort of administrative spending to help reduce that.

So this is both a programmatic and a fiscal priority for the legislature.

Uh next question, next slide.

So in our view, there really are key three issues before the legislature at the moment.

Um in the short run, the most important is how to implement HR1.

And we sort of talked about some of the key choices facing the legislature, including around eligibility, how to restructure provider taxes, for example, um, how to reduce that error rate.

So this is sort of the immediate um area focus of the legislature now.

There also are some longer term issues, though, that the legislature also will likely need to grapple with.

A key one is around the sort of future of the Medi-Cal and Calfresh program, but particularly the Medi-Cal program, given its current size, and also given the significant sort of policy effects from HR1 on Medi-Cal.

Um, and so you know, given that uh uh HR1 really results in a kind of disenrollments, and given sort of the state's uh fiscal situation, the legislature may face questions about you know what will be the size and scope of Medi-Cal moving forward, and also how to how to pay for a lot of these costs, particularly if provider taxes are a less feasible option than they were in the past.

And then finally, uh a third key question will be around uh those who are disenrolled from Medi-Cal and also CalFresh.

And that's because um alternative uh sources really are not as readily available for for people.

So, for example, in Medi-Cal, um uh it's it's expected a lot of the a lot of folks who leave Medi-Cal will become uninsured.

And that's because while there are alternative sources of coverage, like uh employer-based coverage or the covered California, um there are certain barriers that that people will face.

So, for example, um, a lot of people who leave Medi-Cal by definition will not be working full-time.

So they'll have less access to employer-sponsored coverage than other groups.

HR1 also uh bars people who are disenrolled from uh Medi-Cal as a result of the work requirements from accessing federally subsidized coverage in covered California.

So they also face barriers to accessing that form of coverage too.

Similarly, with food assistance, there are even fewer options than there are in the healthcare setting for alternative sources outside of CalFresh.

Really, the the main one that we're aware of is is really sort of the system of food banks we have in the state.

But the the benefit there is generally less uh significant than one gets in CalFresh.

So again, folks would still be looking at a diminished uh benefit there.

And so given the state's fiscal constraints and given these barriers, you know, how to ensure the sort of long-standing uh policy goals of including coverage and providing assistance to people, that'll be sort of a key uh question for the legislature moving forward.

Next slide.

All right, we we now wanted to offer kind of our perspective on what we think are some of the key issues for counties, also based on what we've heard from from counties at the state level, but again, also very interested to hear from you all as you're as you're thinking about it on the ground here.

So next slide.

So the first key issue that um we think will be key for the legislature to think about our county indigeno health programs.

Don't need to explain these programs to use the county, you you know how these work.

Um, but as a you know generally these are a source of of uh basic health coverage for uh low-income people who are uninsured.

Uh, these programs were uh much more significant statewide um a decade ago before the Affordable Care Act.

Uh after the Affordable Care Act was enacted, a lot of uninsured people gained Medi-Cal coverage.

And so as a result, a lot of county programs, not all, but a lot of them have um greatly diminished in their in their caseloads and level of services.

Um because the uninsured population is expected to rise over time.

This this puts new cost pressure on to counties.

And so this will really be a sort of a key question for counties and the state, you know, how to how to sort of address this.

Um can pointing the exact cost pressure is it can be somewhat challenging, particularly at the statewide level.

There is pretty limited statewide data available on county indigen health programs, and also counties have some have some uh flexibility to set their programs, for example, eligibility.

Um so as a result, it's hard to give a precise estimate, but we we've seen cost pressure sort of in the potentially in the as much as the low billions of dollars.

So uh it could be it could be um significant.

Now, the primary way that county programs have been funding these their services is through something called realignment, something that many folks here know quite a bit about.

Um we don't have time to really talk about the mechanics of realignment, but this is basically provides additional state funding uh for certain health and human services at the county level.

And it what's important to know is after the Affordable Care Act was enacted and county programs began their caseloads began to decline, the state reworked how it did realignment, basically shifting uh certain funds out of funding for health programs and into other social service programs.

And a lot of this was basically to offset state costs for these uh human service programs.

Well, now again, the situation is changing, the uninsured rate is rising again.

So it raises a question about this overarching structure of realignment.

And so this could be something for the legislature to begin thinking about.

Realignment is very technical and also involves making a lot of trade-offs, so it's not a simple discussion, it's not something you could expect to see in a few months.

It's really be a long-term consideration that would that would really be what to what you'd want to keep an eye on.

Next slide.

All right, so there also will be some effect on county hospitals, and there's some overlap here.

A lot of county hospitals are sort of part of their indigenous health programs.

So there are some crossover here.

But generally what you would expect to see is um more uncompensated care.

Um, and this is because again, um, as people become uninsured, uh, some of them will still show up, you know, at hospitals and clinics, including those run by counties, and they will not have coverage for most servers, except if they except if it's at the emergency room, for example.

And so you could expect to see more uncompensated care, uh, that care that's basically not paid for.

Um, there also will be some less medic uh Medicaid funding for counties.

Uh, some of this will be because of, again, very technical financing rule changes that will reduce reimbursement rates for in Medi-Cal.

Um, I get don't have a lot of time to talk about it, but effectively the the sort of limit on what the state can pay in Medi-Cal to providers will be declining over time.

And that has a lot of effect on counties.

Counties recently, um, the state recently had efforts to expand funding for counties.

And so though that that expansion has been approved, but it likely now will be more temporary and will go down over time as the new limits go into a place.

Counties also will face some costs that the state faces because of financing changes.

So, for example, there will be less funding for emergency care for immigrant services.

A lot of this is really at the state level, but counties also bear some of this cost, and this is because counties also help pay for the non-federal share of cost in Medi-Cal.

And so instead of the state bearing that cost, the counties will pay for some of that cost.

And so a net, which you can sort of expect as overall an overall tighter financial situation for a lot of hospitals.

There will be it'll affect private hospitals too, but you can also expect it at the county level.

A way we generally look at this is we look at sort of the margin, which is sort of the the amount of revenue left over after covering expenses.

And generally, count hospitals aim to have positive margins year to year, or try to, it's it's if you're if you're in negative margins every year, it's sort of a bad sign of your financial situation.

And there has been some research that suggests that hospitals in aggregate could face um as much as a one percentage point reduction in margins.

And for context, you know, um in 2022, aggregate margins for all hospitals, private and public, were close to zero.

And that was a time when several hospitals were reporting financial distress, and the state actually created programs to help address that.

So a one percentage point reduction margin, it's hard to sort of understand what the effect of that is, but you know, depending on where hospital finances sort of end up in the future, it it could that could signify um some significant significant significant effects for some hospitals.

Again, we're also talking in aggregate.

Hospitals are very diverse and face different situations.

So you know, it's that one percentage point reduction for some hospitals might not be significant, but for others could be very significant.

Next slide.

All right, so the last um county consideration that we wanted to touch on is is administration.

It is not lost on the legislature that it is the counties that are responsible for eligibility administration in both um CalFresh and Medi-Cal.

And HR1 results in greater workload and in many ways higher stakes.

And so the state, as you likely know, is is uh working on ways to try to strengthen uh data linkages and and use the information that we already have to try to figure out who might be exempt and who might be compliant with the work rules to minimize that that administrative burden.

Um there's then also the the focus on on reducing payment errors, which is going to require um a combination of approaches looking at um education for uh county workers and enrollees, uh streamlining processes and and bringing on new tools to um evaluate um the eligibility criteria that that can go off track and result in some of these errors.

Um we um are helping the legislature to look at uh various proposals.

Uh county organizations have estimated a collective need of additional state funding and the hundreds of millions of dollars to help address um these these administrative realities.

Um but of course, like like everything else, um the significant fiscal challenges that the state faces uh will require some level of prioritization.

Um last slide.

So we're again uh so happy to be here to have this conversation with you.

We've got our contact information up here.

Um you should please feel free to reach out to us in the future if if we can ever be of assistance and we are happy to take any questions.

Jason and Ryan, you both present as a combo very well, seamlessly comes of I guess this isn't the first time you've done this.

No, it's not actually.

No, for sure.

I'm gonna leave that screen up so people can take a photograph of it if they need to.

And I'll ask if there are any questions.

One observation I have is that uh we talk about costs of health care going up.

We talk about people being disenrolled, choosing not to enroll because of the burden.

Many people are one paycheck away from homelessness.

They're one catastrophic car repair away from homelessness.

And it seems like they may be now one health catastrophe away from homelessness if they can't afford health care.

This is very important to a large part of our population that we care very much about.

The way you presented this highlights that, and we appreciate you for doing that.

Any questions, comments?

Anika you think?

Okay, I know we've had discussions about even the intricate details of our own safety net medical enrollment having to change with over time.

Anyway, any questions, comments?

Yeah, thank you for that, supervisor.

Um, and really appreciate the presentation.

I I think especially the social services director and I have uh live and breathe this every day.

And so it's really uh good to know that folks at the state are thinking about both short-term and long-term solutions.

Um, just to kind of share a little bit of impacts locally.

Um, so you know, you talked about indigent care.

So we have a pretty robust indigent care program called Health Pack.

Uh, prior to the Affordable Care Act, it was at about 90,000 was the enrollment.

Um, and then with all of the coverage expansions, including the state only, that's gone down to like 3,000.

So, you know, really preparing for that impact that there could be a significant number of people who are coming in.

Um, and uh, you know, I think in terms of Medi-Cal enrollment, we're we've got a pretty big Medi-Cal enrollment in the in the state, but uh it could be losing again 80,000 people losing coverage uh due to work requirements, you know, high-level estimates.

And so um interested to know I it's I don't get a sense that uh the legislatures necessarily um looking to make the difficult decisions that are gonna be required in this.

So interested to know what you're hearing from the assembly side, you know, like uh all those things that you pointed out in terms of eligibility decisions or um like are there things that the state can do at the state level um so that let's say people who are falling out of Medi-Cal because they're churning for work requirements or for other reasons.

Is there a way that the state can keep them in Medi-Calm so that they don't hit county indigenous care programs?

Um, you know, the providers that are reliant on that revenue can also continue to access it.

Yeah, so um, you know, I I guess I would I would first uh maybe just emphasize that the legislature is facing a number of um uh difficult decisions um and the sort of coming in May.

Um, you know, really the big issue facing the legislature now is that sort of structural deficit that's sort of facing the state.

And um it's this isn't sort of get at the administrative burden point you raised, but just wanted to note that about the difficult decisions and it um it does sort of require it does require the the legislature really look at um kind of the budget as a whole and identifies solutions, and there's been a lot of discussion about new revenue ideas and and new sort of cost ideas, cost reduction ideas.

The reality is the legislature probably can't do it just through new revenue alone, but there has been some discussion about that.

The other sort of fiscal challenge facing the legislature is there are some limits, um, most notably about 40% of the general fund has to be spent on K through 14 education.

It's it's called proposition 98.

And really, as a result of that, that that means that whatever changes happen in that area, it becomes it it's generally not as available to address the deficit.

So that that limits sort of the scope of available options for the legislature too.

So there has levels of discretion too that it also has to work through.

So legislature is sort of facing some some difficult decisions, and that's that's without HR1 in place.

So then you add in HR1, and that that sort of adds to that um uncertainty.

There have been discussions, um, maybe some discussions about uh potential one-time action.

So that that could be something that comes up.

That would depend a lot though on where the legislature's at in May.

Um revenue has been sort of on the uptick, um, but there are lots of things going in either direction.

So it's really hard to know where our budget situation will be, at least in the short run.

Um so that that would be something to keep track of.

In terms of the administrative burden, um uh, you know, we I think we kind of spoke to this a bit, and I it's uh you mentioned it too, but a lot I think a lot of the legislative discussions really been focused on on better automation and and trying to um kind of exploit that.

So, for example, how to what extent can we um sort of automatically determine people's eligibility.

There also are some flexibilities in HR1.

Uh, one key one that we we're we're we've been kind of discussing, I don't know if you've if you've noticed it as a as a a lot of potential there, but would be that sort of uh you you can actually measure uh compliance with the work requirement, not just from hours of work, but also using income measures.

And that income measure could potentially allow for more automation because you're looking at income instead of having to report that you complied with the work requirement specifically.

So um the role the state's also been trying to maximize some of the other optional flexibilities in HR1.

So, for example, HR1 allows states but doesn't require them to exempt counties with higher unemployment rates.

And the states seems to be that seems to be the plan is to sort of maximize these um uh flexibilities.

So maximizing flexibilities, um, you know, encouraging automation.

Uh these are some of the key sort of strategies the legislature's been talking about.

Yeah, uh thank you for that.

And I've I'll pass the mic as well, but just wanted to kind of note aside from the administrative pressure, sort of the issue with people losing coverage, right?

And so if they're losing coverage, then they're falling on to the indigent care programs or they're going to the emergency rooms more.

And our safety net is already stretched so thin that trying to think about um, you know, instead of going back to a world of pre-ACA where 58 different counties had 58 different indigent care programs, we've made all these advances in Medi-Cal.

And so is there a way to um continue to have some sort of statewide structure that sort of helps ensure you know, a better level of benefits for for people so that they're not completely losing it.

I I just also wanted to note um, yeah, a lot of the discussion um, you know, I think the lot of the obvious sort of answer is well, you could create a state program with state-only funding, but again, you you run up against those fiscal constraints.

Um, and then you know, it's not um, you know, if the state were to, you know, the state also has limitations in its ability to set minimum requirements on counties for their indigenous health programs that there are some um issues that would need to be sorted out there too.

So there are limitations there that the legislature is hitting up against, and I think that's where the the conversation's kind of currently at.

Um, so um not a not a not an optimistic answer, but that's that's kind of where things are at.

So thank you, Andrea Ford again, agency director for social services.

I just want to give you some low some local stats.

Um, so with about 400,000 medical enrollees down from about 100,000 from the numbers that you have in your presentation.

We're at about 400,000 now.

So HR1 is already having an impact.

And 170,000 CalFresh recipients, Alameda County is one of the most impacted jurisdictions in the state.

And when we talk about Medi-Cal eligibility impacts, um, you did mention that HR1 establishes new community engagement and work requirements and increases redetermination frequency.

Our um own county data as of today shows that about 159,000 Alameda County residents may be subject to work requirements beginning in 2027.

Um 14,600 are expected to lose coverage in 2627, rising to over 50,000 by 2030.

So that just really exacerbates the impact that Anika mentioned on our county health indigenous.

When we talk about CalFresh eligibility impacts, um expanded ABOC time limit begins in a couple of months, June 1st, 2026.

Um, 40,000 Alameda County CalFresh recipients will be subject to strict three-month time limits unless they comply with work requirements.

27,000 are non-exempt ABODs, and 19,000 are at the highest risk of losing food assistance.

Right now, Alameda County already has already one in 10 residents experiencing food insecurity.

So you can see what the impact would be at a local level.

I'm not gonna repeat everything you said, but what I'll um go to next is CalFresh administrative costs with the increased funding sharing ratio um that will increase cost Alameda County from 16.1 million dollars currently to 26.3 million effect of October 2026.

Huge, huge burden on Alameda County funding.

Next, I'll talk about the CalFresh payment error rates.

We are actively working to reduce it.

But when you factor in the pro the pavement error rate with the administrative costs, that's like a double whammy against us.

And then what I will further state um our asks for the LAO's consideration is a support continuation of the CalFresh match waiver through fiscal year 2820 2028 through 2029.

I didn't hear you mention that, but um, the match waiver will prevent counties from losing state and federal drawdown capacity during a period of unprecedented administrative demand, and then it's support additional workforce funding for medical and calfresh eligibility.

CWDA and CDSS is asking for about 200 million dollars um statewide.

So if the LAL can um support that as well, and then the urban county um requests include 230 million dollars for fiscal year 2627 and 305 million for 2728 for medical medical eligibility workload.

We would ask that you also support that request.

In addition to 102 million and 57.9 million ongoing for CalFresh staffing needs.

With additional funding, our agency, our county would be able to enhance the case record review process, develop a CalFresh employment and training workfare component in partnership with the local food banks, expand training capacity, increase community outreach.

In closing, Alameda County is committed to reducing errors, maintaining access to essential benefits and implementing new federal requirements responsibly.

However, the magnitude of HR1 cannot be managed without sustained state partnership, and that includes you all as well.

We look forward to continue collaboration with the LAO to ensure that Californians and Alameda County residents, particularly the most vulnerable, maintain access to food and health coverage they need.

Thank you.

Thank you.

Any other questions, comments from our esteemed guests?

If not, we'll thank you very much for being here.

I know you're very busy, and you got to get back to Sacramento.

Is that right?

You're welcome to stay for the rest of our meeting.

You're welcome to leave if you need to.

But we have a nice gift for you.

Susan is the best.

So whenever you're ready to go, stop over here before you.

But now we're going to turn it back over to our um esteemed CAO's office for a Alameda County budget update.

So we heard federal and state overview before.

Now we're gonna bring it down to county level.

Yeah, I think I think that you will hear Rasley's gonna present our um county budget, but you know, many of the same themes, and so I really appreciate the um report from the LAO's office and really value your perspective seeing it from a statewide perspective, and as we bring it down to a county level, obviously we're grappling with some of the same challenges, the structural deficits, revenues not growing as fast as expenditures, uh, many of the same um challenges and issues.

And so I really appreciate the report from the LAO's office and really value your perspective, seeing it from a statewide perspective, and as we bring it down to a county level, obviously we're grappling with some of the same challenges, the structural deficits, revenues not growing as fast as expenditures, many of the same challenges and issues.

So today we're gonna go through just a little bit about our current year budget, but really focus on our maintenance of effort budget as we plan for next year's budget and identify where our funding gap is and the structural challenges that we have.

Great, thank you.

So to get started, I just briefly want to recap where we landed for the current year.

So for fiscal year 2526, the budget is balanced at $6.1 billion for county programs and services.

General fund appropriations total $4.3 billion, which is an increase of $300 million over fiscal year 24-25 final budget.

And the budget supports a workforce of nearly 10,500 full-time equivalent positions, which is an increase of nine and a half FTE from the prior year.

So taking a look at budget balancing solutions for last year or for the current year, um, we had one-time strategies totaling 61 million and ongoing strategies totaling 45 million to close a gap of 105 million.

Um last year, I just want to do a quick reminder that nearly two-thirds of our financing is highly reliant on state and federal aid, which you can see here.

So moving on to the 26-27 MOE budget.

So your boards approved adopted maintenance of effort policy guides submissions that represent year over year baseline changes.

Key aspects of the MOE policy are outlined on this slide.

So they include known salary and benefit changes as well as operational and internal service fund adjustments, a 4% COLA for eligible CBO contracts, approved mid-year adjustments, as well as alignment with the board's adopted vision 2036.

So here we look at the program area.

So just to say we will be discussing the general fund.

So looking at the program area, um, we have an increase in appropriations of 78 million or 2%.

Revenues are flat with a less than $2 million increase.

And then total, there is a net county cost increase of $76 million or 8% from the current year.

Here we see the fiscal year 2627 MOE budget by program area.

Public protection and public assistance are over 1.1 billion each.

Health care is over 1.3 billion.

On the revenue side, general government revenue is 193 million, public protection 560 million, public assistance 1.1 billion, and health care is 1.1 billion.

This brings the net county cost for all program areas to 1,045 million.

Here we have the net county cost change by program compared to the current year.

Public assistance six million or eight percent, and health care nine million and four percent.

So listed here are some of the major changes on the program side.

So we have a reduction in both expenditures and revenues of 43 million related to the transition of MHSA to BHSA as a result of Prop 1 and public protection.

We have a decline in public safety sales tax revenue of 33 million.

We also have a loss of 20 million in Cal flesh fresh revenue, uh which is which is also due partially to the impacts of HR1.

We have revenues for the managed care plan, which are decreasing by 10 million related to contract changes.

We're projecting an increase of 12 million for election-related costs.

IHSS is increasing by 18 million.

Um we have an increase in medical care financing for AHS and St.

Rose of 24 million, um, and we also have an increase of internal service fund increases of 33 million and a net salary and benefit increase of 41 million.

I want to spend a little bit more time talking about these last two points.

So here looking at internal service funds, um information and technology is decreasing by 3 million or 3% due to the completion of a few IT projects.

Communication and radios has a significant increase, which is to replace emergency communication radios.

Building and maintenance is increasing by 19 million or 12%.

Motor vehicle is increasing by 4 million or 18%, and then risk management is increasing by 7 million or 9%.

So just to provide a little bit more detail on the salary and benefit adjustments.

So we have cost of living and wage adjustments increasing by $72 million.

We have health and dental insurance increasing by 10.

Workers' compensation is increasing by 30.

And then we're also seeing an overtime increase of 7 million, and then other benefits, an increase of 17 million.

So gross salary and benefits is 134 million.

Now I do want to point out that we're also seeing a savings of 93 million in retirement as a result of prepaid unfunded liabilities.

So together, that results in a net salary and benefit adjustment of 41 million.

So listed here are some of the other program adjustments that hadn't haven't previously discussed.

So the 4% board approved CB Ocola results in an increase of $4 million.

We have a $6 million increase related to San Rita jail service contracts, $1.3 million in expert witness costs for both the district attorney and public defender, a $5 million increase to support indigent defense, and then on the revenue side, we have an $8 million increase in realignment revenues, $14 million in election services revenues, a million and a half decrease in property transfer tax, a $1 million decrease in recording fees, a $4 million decrease in federal contract revenues, an increase of half a million from the police protection CSA, as well as a $1 million increase in unincorporated revenue.

So now turning to the non-program side.

So capital and major maintenance have a total appropriation of $125 million with revenue of $75 million for a net cost of $50 million.

Contingency and reserves is $137 million with revenue of $12 million for a net cost of $125 million.

Debt service is $54 million with revenue of $12 million and a net cost of $38 million.

And net program expenses and revenue are $68 million with revenues of $1.2 billion for a negative net county cost of negative $1.2 billion.

So combined the total net county cost of for non-program is a negative $954 million.

So now comparing that to the current year, capital and major maintenance is increasing by $50 million, contingency and reserves by half a million, debt service is decreasing by $8 million, and nonprogram expenses and revenues is decreasing by $27 million.

This results in a net county cost increase of $15 million.

So here are the details on that $15 million change.

So I talked about the first three.

So moving on to general liability and reserves.

Last year we did a one-time contribution of $75 million due to the increase in volume and cost of claims.

This year we're making a one-time contribution to workers' compensation reserves.

So I'd like to point out that this $33 million is in addition to the $30 million I talked about previously on the program side.

So total workers' compensation increase is $63 million.

And non-program financing, there's a loss of $61 million in one-time revenues, an increase of $11 million in interest, an increase of $14 million in property taxes, $9 million in motor vehicle EREF, $5.5 million for indirect cost reimbursements, and $6 million in other nonprogram revenues.

So here combining both the program and non-program sides of the equation.

So on the program side, we have $1,045 million in cost and that with the non-program side.

So this chart shows the annual funding gaps that the county has experienced after the education educational revenue augmentation fund was implemented in fiscal 9293.

So since EREF began, the county has closed funding shortfalls totaling 2.7 billion.

I do want to point out that the net cost increases in both the program and the non-program side result in the $91 million funding gap, but that does benefit from the $95 million savings in retirement to off which offsets mostly salary and benefit cost increases.

So without the benefit of the retirement rate reductions and the lower contributions, the gap would have been 185 million, which would require significant cuts and reductions.

The presentation also I note the comment just made our budget shortfall could be a lot worse if we had not paid down pension liabilities in prior years.

Could be double 185 million instead of 91 million.

That's the fiscal prudency that we have here in Alameda County, Ryan and Jason.

You can tell other counties about that.

Any other questions or comments without any ready to keep going?

Okay, thank you.

Um so we have a recommended budget balancing approach.

So we uh to close the preliminary funding gap and develop a balanced proposed budget.

So the CAO would work with the county agency and department heads to close the structural funding gap through a combination of strategies that would include reviewing all program revenues to identify additional ongoing adjustments, reviewing program budgets to identify further cost reductions, uh, vacant funded positions, other available departmental funds, non-program revenue and expenses based on more current data, consider other countywide strategies to reduce net costs and continue to reduce reliance on one-time strategies, including prior year savings.

So listed here is a list of pending factors.

Um the counters counties labor negotiations and workforce challenges significantly impact our long-term outlook as well as rising insurance and employee benefit costs.

Uh, we also have pending litigation and settlements, which are impacting our insurance costs in addition to the overall hardening of the insurance market.

We have the prospect of potential federal and state audit disallowances.

Um, we also have unfunded capital needs, some of which are litigation related, the implementation of state programs and policy changes like Prop One.

We'll also be revisiting the implement uh revisiting Measure W as well as other board initiatives, and as we've seen, global finances and the impact of climate disasters have the potential to do significant economic harm.

So there's always the potential of an economic downturn, and it's always a concern for us given our heavy reliance on state and federal funding.

So looking ahead, um, just want to quickly talk about um our unfunded um capital and major maintenance needs, which is over a billion dollars.

Um, so just wanted to to highlight that.

So for next steps, for next steps, we'll review and analyze the impact of the governor's May revision.

Um we'll continue to update and uh revenue projections and implement cost containment and reduction strategies.

We'll identify strategies to close the preliminary funding gap and develop a balanced 26-27 proposed budget.

We will review positions and vacancy factors, consider technology solutions and other efficiency initiatives to streamline operations, continue to collaborate with labor and community partners to identify strategies to maintain a balanced budget and to continue providing critical services to our diverse communities, and again work with county agencies and department heads to close the structural funding gap through a combination of strategies.

So listed here we have our budget development timeline.

Yeah.

So just before we get um to the calendar, just obviously the path ahead is for us to close our 91.4 million dollar funding gap.

And I want to also emphasize again that our true structural funding gap was 180 million dollars based on the maintenance of effort budgets.

It was only because you know the board had uh taken a position to um pay down some of its future pension liability, which resulted in lower contribution rates that we're benefiting from in this next year that's helping us offset some of that gap.

So I think I just want everyone to be mindful of that.

You know, what's um I think of concern, but somewhat not surprising is just that as always our revenues are not keeping pace with our expenses, but even more so this year on the program side, based on the maintenance of effort budgets that have been developed, the growth was so ridiculously low we couldn't even calculate a percentage, you know, on over a billion dollars of revenue, the net growth in program revenue was less than two million dollars.

You know, similarly on the um discretionary revenue side, which we depend on to help us offset some of the program um funding gap.

You know, we our growth is slowing down.

You've heard the assessor talk about the assessed valuation estimate of 2.5%.

So we're seeing that continue um to decline.

And you know, so that certainly has an impact.

And if you saw on some of the slides on the non-program side for the first time in many, many years, we actually we don't have the benefit of additional discretionary revenue to help offset the increases on the program side.

So I think you know, we need to sharpen our pencils.

We've got a short time frame to close that 91, the remaining 91 million uh dollar funding gap.

So we'll be working with the departments to to do that, and you know, would encourage everybody to start sharpening pencils around looking at revenues, expenditure reductions, those are the only two ways you can reduce that that gap or a combination of it.

And we know that we had 60 million dollars of one-time strategies that we used to balance this year's budget that we also have to make up, which is a piece of that um gap as well.

So um really uh appreciate everybody's you know partnership.

We're on a shorter time frame this year because we are presenting the proposed balanced budget to the board on May 28th.

Um, and obviously we're anxiously awaiting the May revise as well, and we'll you know be working to incorporate whatever we can there.

Hopefully, there'll be some positive news as well.

Thank you, Susan.

I'd like to um commend our CAO and her staff for being um very buttoned up when we say the prudence of Joseph, that's Joseph, Susan Ranishi, legendary CAO in the state of California.

I do have a question though, Jason and Ryan.

Every year, LAO and governor come out with estimates.

Sometimes it's a deficit, and it's often the LAO's office has a larger deficit projected than the governor.

Maybe it's not always that way.

I don't know.

But at the end of the year, do we know who's right?

Do we keep score?

Who's closer?

Uh so we uh I don't, you know, the I don't have that exact information about who's right.

I haven't I haven't done the scorekeeping myself, but um our you know, when we do when we when we at the LAO do our projections, we do try to uh look at models that look at actual experience and then try to compare our models against that at the level of sophistication varies, but at for tax revenue, we certainly try to do to do that.

And actually, what we've done in more recent years is we've tried to model uh many different kinds of scenarios, and then we try to project revenue levels that are you know 50 percent um equally likely to be too high or too low.

So, in other words, uh you know, forecasting is really always going to be wrong.

There's always a level of error.

We're trying to minimize it, and we try to get to a level where we're equally likely to be too high or too low, and that that's really been the focus of our office in more recent years.

Um the Department of Finance has their own sort of methodology, which I'm not prepared to speak to, but um it also does vary year to year.

There have been years where uh we've projected higher revenues than the administration that that's happened in some years too.

So it does vary year to year.

We're not always lower in revenues or or higher in deficit.

Some years we are, some years we aren't.

There's also differences in how you think about the deficit.

Um, there was one year where our numbers were actually very similar, but um the the governor really characterized uh some things as current law where we we thought they were more uh changes to current law and current practice and really counted as as ways to address the deficit.

So that resulted in a different estimate as well.

So some of that was a bit of framing.

So it really does vary year to year, but our our um our approach really does try to focus not on being a hundred percent right, but but really trying to minimize the error and trying to trying to sort of uh recognize the uncertainty, quantify it, and um uh sort of try to be uh have an equal chance of being too high or too low.

Very interesting.

Thank you.

Um, any other questions or comments of our staff or LAO guests, Supervisor Tam, any comments from you before we go to public comment?

Um thank you, President Halbert.

I also wanted to echo my appreciation for a lot of the work that went into um getting us to this point.

I know we went through 11 hours of hearings on the um maintenance of effort.

Um I'm just trying to grapple with how we're incorporating some of the impacts of HR1 into that um funding gap because of what's happening with the Alameda Health Systems and some of the financing that the Alameda County Health Department will be um propide providing to the Alameda Health Systems.

So, since there is so much unknown about HR1, the only things that are included in our maintenance of effort budget are those things that are known, and that would be I think Calfresh in social services is um actually reflected in the budget, and you saw the reduction, um, but otherwise we have not anticipated any other significant increases, although we know that there are you know large estimates of potential impact, especially around you know, Medicaid and what's happening at the um state.

So it's just the social services, um, the impacts of um in behavioral health care with some of the payment shifts to you know fee for service, but largely HR1 is not reflected.

So this is just our basic gap that we have to close before addressing the impacts of HR1.

So the gap could be worse.

Correct.

I mean and so if you look at all those other pending factors, it could be a lot worse.

See another no other questions.

We'll go to public comment, a chance for members of the public, either in person or online to make up to two minutes of comment.

Do we have any halbert?

I also just wanted to acknowledge that um the county's auditor controller has been um participating remotely.

She's at her state association meeting.

Thank you, and we thank our auditor controller for being with us.

Anyone online?

Anybody in the person goes first?

Um, Chair, we have no speakers, showing no hands in Zoom.

Okay, with that said, the last item is closing remarks.

Gentlemen, thank you.

Team, thank you.

Lena, thank you.

We are now adjourned.