Memorandum
Date: November 17, 2026
To: The Honorable Brad Rasmussen, Chair, Lake County Board of Supervisors
From: Susan Parker, County Administrative Officer
Stephen L. Carter, Jr., Assistant County Administrative Officer
Casey Moreno, Deputy County Administrative Officer
Subject: 1:30 P.M. a) Consideration of an Update of the Fiscal Year 2026-27 Adopted Budget for the County of Lake Governed by the Board of Supervisors and b) Adopt Resolution amending the Position Allocation and, c) Adopt the Resolution Amending the Adopted Budget
Executive Summary:
We are pleased to present, for your Board’s consideration, part one of a two-part update; part two will be presented December 15, 2026.During Final Recommended Budget Hearings of September 29 and October 1, 2026, your Board asked Administration to present interim budget updates prior to substantive Fiscal Year (FY) 2026-27 Mid-Year revisions; this request was responsive to known pressures on the General Fund, which had necessitated a hiring freeze and other measures.
Due to issues surrounding implementation of the County’s new Enterprise Resource Planning software (ERP), Workday (which is being addressed as a matter of highly urgent priority), fully reliable information on cash balances is not currently available. Your Board’s 9:15am item (6.3) will offer significant insight into those concerns. Provided FY 2025-26 is closed out in time by the County’s Auditor Controller, an updated 5-year forecast will be included in Administration’s December update.
Today’s (November 17, 2026) presentation will provide an overview of the County’s 2026-27 Budget. The remainder of this Memo seeks to provide some clarifying information for public inspection, in anticipation of the presentation.
A Budget is a Planning Document
The budget is a financial planning document, and pursuant to the County Budget Act (CA Government Code Section 29000-30200), it must be balanced. The purpose of a budget is to fund essential services, efficiently allocate resources, provide for transparent fiscal reporting, and implement community priorities. The budget offers a framework, and monitoring of revenues and expenditures against these planned figures ensures compliance and enables timely corrective action.
A balanced budget, alone, is insufficient to demonstrate County finances are in good order. The County of Lake strives to adhere to best practices put forth by the Government Finance Officers Association (GFOA). In April of 2025, GFOA released an article titled “Structural Budget Balance” (<https://www.gfoa.org/materials/gfr042025-structural-balance>), which includes the following statement:
Most state and local governments are required to pass a balanced budget; however, a budget that may fit the statutory definition of a "balanced budget" may not, in fact, be financially sustainable. For example, it could include non-recurring resources such as asset sales or reserves to fund ongoing expenditures, and therefore not be in structural balance. A true structurally balanced budget is one that supports financial sustainability for multiple years into the future. A government needs to make sure it’s aware of the distinction between satisfying the statutory definition and achieving a true structurally balanced budget.
Is the County’s Budget Structurally Balanced?
Yes. General Fund contributions made to County Departments (internally referred to as the Department’s “Net County Cost”) are represented by Budget Unit 1120, which is titled Non-Departmental Revenue. Property Tax and Sales Taxes comprise the largest portion of “ongoing revenues,” and provide much of the funding allocated to various General Fund departments. Projected ongoing revenues are greater than projected ongoing appropriations; therefore, the budget, as a planning document, is structurally balanced.
Salaries and Benefits (total employee compensation) represent the largest ongoing expense. Payroll within General Fund budgets is supported by the Net County Cost Allocation. Grants and Fee-related revenues are expected to cover the remainder of payroll-related expenses. Another $6,202,775 is departmental expenses, including but not limited to communications, insurances, office supplies, and software subscriptions.
Planning for Contingencies is Important
Including a buffer, or “Contingencies,” in a budget plan supports the need to have cash available for unforeseen expenses, risks or emergencies, and ensure they do not disrupt operations.
During the first five months of the Fiscal Year, revenue received is commonly outpaced by expenditures. Why? The first installment of Property Taxes, which provide the lion’s share of General Fund support, is due December 10. Contingencies, which typically represent about 5% of the anticipated core revenue allocated across Budget Units, allow for funds to be available without transferring from a Reserve. Over time, Contingency planning has fluctuated, due to a variety of factors. In FY 2019-20, the amount budgeted for Contingencies increased from $1,000,000 to $4,548,360, to cover increasing personnel costs. Each year since, Administrative Office staff have sought to maintain a minimum of 5% of the central revenue for Contingencies. Salary increases for County staff in FY 2026-27 (negotiated with employee groups via Memoranda of Understanding, or MOUs) are expected to total $2,159,710, and this amount will be covered by Contingencies, if revenues do not come in as expected.
Your and Predecessor Boards have Prepared the County of Lake for the Unknown
Since FY 2019-20, your Board has invested in building up the County’s General Reserves (Fund 151), as well as various other Reserves, to prepare for leaner years. Despite significant economic challenges that have increased the costs of many County services, to-date, we have dipped into the County’s General Reserves only temporarily, bridging gaps during the time prior to receipt of the first installment of property taxes; once the first installment of Property Tax revenues has been received, Reserve funds are replenished.
Administration regularly monitors various aspects of the budget and fund balances and collaborates with departments throughout the year. Major revisions to the County’s fiscal planning (and numerous minor adjustments to accommodate changes in expectations surrounding County revenue and expenditures) are typically undertaken through the “Mid-Year Budget.” at which time if additional adjustments are necessary, they will be made at that time.
Fiscal Impact:
Your approval of these proposed amendments to the FY 2026-27 Adopted Budget will enable the County to continue to meet statutory obligations and support operations.
If not budgeted, fill in the blanks below only:
Estimated Cost: ________ Amount Budgeted: ________ Additional Requested: ________ Future Annual Cost: ________
Purchasing Considerations (check all that apply): ☒ Not applicable
☐ Fully Article X. <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI>- and/or Consultant Selection Policy <http://lcnet.co.lake.ca.us/Assets/Intranet/Policy/Policies+$!26+Procedures+Manual/Ch4_2021v2.pdf>-Compliant (describe process undertaken in “Executive Summary”)
☐ Section 2-38 <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI> Exemption from Competitive Bidding (rationale in “Executive Summary,” attach documentation, as needed)
☐ For Technology Purchases: Vetted and Supported by the Technology Governance Committee <http://lcnet.co.lake.ca.us/Assets/Intranet/Intranet+Forms/Information+Technology/AdvPlan.pdf> (“Yes,” if checked)
☐ Other (Please describe in Executive Summary)
Consistency with Vision 2028 <http://www.lakecountyca.gov/Government/Directory/Administration/Visioning/Vision2028.htm> (check all that apply): ☐ Not applicable
☒ Well-being of Residents ☒ Public Safety ☐ Disaster Prevention, Preparedness, Recovery
☐ Economic Development ☐ Infrastructure ☒ County Workforce
☐ Community Collaboration ☐ Business Process Efficiency ☐ Clear Lake
Recommended Action:
1) Adopt the Resolution Adopting the Final Recommended Budget for Fiscal Year 2026-27 as detailed in the attached, incorporating any changes desired by your Board.
2) Adopt the Resolution Amending the Position Allocation Chart for Fiscal Year 2026-27 Adopted Budget.