Good afternoon, everyone. Welcome to the Administration's Operations and Budget Committee of Tuesday, March 24th.

We will continue using budget management strategies including um the hiring management that Joe just showing um that we have initiated throughout January and February of this year.

We are reviewing our contracts and looking at um contracts and taking a pause on contracts that are not mandated um and we'll review them as we proceed.

Capital projects are being reprioritized. The county doesn't have the capacity to do everything in the current capital budget all at once.

Leadership will continue to evaluate and plan budget saving strategies and monitor our progress.

Our teams in grants management administration and county attorney's office will continue their work on tracking federal impacts.

I want to express the appreciation. This is a lot of hard work um for the leadership in Hennepin County, for our staff, for delivering services to our residents.

As you heard at our January update, there are substantial budget challenges that we are facing in 2026 and into 2027.

The goal of these budget update presentation is to provide transparency and information to you and to our residents regarding the tracking and monitoring of the county's financial health throughout this year.

We remain steadfast in our commitment of services to residents as we ensure the county acts with stewardship of public resources.

We had 9,762 positions in the county budget for 2026. That's down significantly from 2025, when at this time last year, we had just under 10,000.

We have 100 fewer positions filled in the county than we had last year. That's a product of us holding positions in 2025 and continuing to hold in 2026.

Human Services. When we adopted the 2026 budget, we had an aggressive target for them to reduce their overall staffing to get to a sustainable level.

The Sheriff is the one other area that's currently over complement.

The total number of actual FTEs um that we had as of the end of um February was 9,280. That is about 300 fewer than the prior year.

We are actually spending less per month in both January and February than the prior year. It's about $7 million difference.

The current impacts that we're experiencing right now is really the first round of impacts on the SNAP food security um cuts. It's a loss of revenue for human services of about $8 million this year.

We have $62 million in federal grants that are currently under various protective orders.

There are currently three grants. We've added one more since we last um gave this update. The first two grants um had been canceled back in January.

The fiscal impact is a $20 loss of revenue to offset our administrative costs for that work. And that is in addition to the 8 million that was described in the previous slide.

So that 20 million would hit our budget in 2027.

Medicaid for the county departments is something that we continue to evaluate.

As soon as we feel confident in those estimates, uh we'll bring that back before the board.

We have our IGR staff as well as all of our departments who follow those issues closely, monitoring and reporting back when there's issues that have come up.

We do feel confident that as things are coming up, we hear about them.

So what we're sharing with you right now is what's on our radar.

Relative to last year, uh we've saved about 7 million per month. We're spending 7 million per month less for January and February compared to last year.

We're going to continue to hold every position that we can.

We have not set a concrete target saying we need to get to X positions. We're really trying to prioritize so that if an emergent issue comes up in one area, we know that we have the flexibility that we can make that hire.

We are going to let that need in the community drive that hiring decision.

We are close to having that ready. Uh we were going to try to have that at this presentation, but we're just not quite confident yet on how solid those numbers will be.

So, I would expect that we'd have those by June. We may communicate something earlier than June um just cuz I know it's been a point of interest for all of you.

I just want the public to see cuz the scale is like a 7x 7 and 1/2 x scale and so I just want everyone to just make sure that we appreciate what's happening cuz I'm assuming this will come back.

The bar chart adds so all 12 months together which is why it gets to over 3 billion on the right and then that that golden rod the yellow line compared to the green one, that's where we're showing an underspend.

So, a lot of this is for public transparency. So, I wanted to This is a new chart for us as well. So, I wanted to amplify this chart. I really like this chart.

The current FTEs under budget. I This is a financial update so I can appreciate why it's framed as this. I just want to acknowledge that the workforce has worked really hard um to maintain services at a lower FTE count overall and I want to appreciate the workforce for that this reality acknowledging that this reality is persisting which gets me to slide 12.

The anticipated cuts slide. Um I I just am noting that under the Hennepin Health Care System, it talks This is about fiscal allocation. But administrative burden is is going to have just as much financial impact on the health and well-being of our organization.

So in a future um presentation, it would be favorable for us to understand the financial impact of the administrative demand um kind of next to the the fiscal note if that makes sense so we can as early as possible really gain an understanding of the residential impact and the workforce impact.

With the attrition that we're seeing, what are the cost savings? You might have said it and I missed it. I apologize.

Do we do we anticipate seeing more attrition as the year goes on then and that number growing?

The Medicaid anticipated cuts we still have as TBD for the county. We'll have specific um We have a lot of Medicaid services within that. Do we have an anticipated time when we can start getting projections of what that's going to look like?

Kind of as a follow-up on that, is there like a degree of certainty that you're looking to achieve like there's with cuts especially um Medicaid services and how uh kind of interdependent it is on so many different things. Um I think when you present it or when you provide us the information, some like level of certainty if you have it um like we're 95% sure or 50% sure. Like I think that's uh that's helpful.

This work it feels because 2026 the setting of the 2026 budget is behind us that really we're looking to the future and we're at the beginning of a process and it's just going to get harder and everybody is doing more with less and that's not going to stop. Um so, I just want to really thank people who are absorbing that.

I also wanted to commend this format. I know I said this a couple months ago when we sort of saw this for the first time, but this is just so um understandable and it's I think it's great for us. It's also great for our residents um and I look forward to pointing people towards these minutes of this meeting.

The grants terminated slide. I wanted to just make sure that there's an effort across the county to spend money um that's um federally granted. I'm sure there is, but I see your head nodding. Thank you.

The anticipated cuts slide. So, just for those listening at home, like notice that the dollar figures here have the letter B by them. Um, you know, this is presented and I appreciate it in a very matter-of-fact way so that people can come to their own conclusions. The facts speak for themselves here. But these numbers are insane.

If you think that our annual budget is 3.something billion and these figures are basically half of that. Um, so I just wanted to pause and acknowledge the magnitude here.

Is it possible and uh, the answer can be no. But I'm curious about FTEs that we share with other jurisdictions. So if you think about social workers at cities um, or joint community policing partnership, they can be a 30% or 40% uh, where we're paying 60%. They may cuz cities are not sitting flush on cash, may start to think, okay, Brooklyn Park, we have three, we're going to pull back to two. So now suddenly we've lost 30% of the revenue um, and we're sitting on a FTE. So I I I would anticipate that everyone else is going to be doing the same exact thing that we are.

I'm also very curious about um, and I'll ask this every time we do the budget. I want to know when Minneapolis is going to start reimbursing for police time.

The time that the sheriff spends patrolling. Uh, you know, as cities are the primary uh, police enforcement inside the city if they're incorporated. Minneapolis is certainly has a budget. They are certainly chewing up time.

I have myself, I know Commissioner Fernando, we've had cities that had to pay when they got short staffed and they had to pay us money, time and a half to have us do that. Minneapolis isn't is a driver of the sheriff's budget um, and it does cause the overtime that we are doing unreimbursed time that no other city could get away with.

The other thing I want to highlight is it's also every contract has an indemnification which means if there's a lawsuit, that is another property tax burden that if we have to settle a lawsuit, we self-insure.

A lawsuit can if something goes one way or the other can be anywhere from two to four million dollars.

So uh, they have the budget. They have the budget for all their officers. They don't have all their officers which means they have unused budget. They can uh, cough it up and I mean it because we made Brooklyn Center, my city, cough it up um, and they are definitely not a rich city and they definitely don't have a lot of money sitting around to do that. So I think we need to redouble that effort at every level is impacting the sheriff's office budget in a negative way.

And I don't appreciate the fact that only one city gets away with not having to do it when my city who has limited means had to.

Um, you know, I think the other part I would like to see is is the best time to start partnerships is three years ago cuz it'll probably take us two to three years to get a partnership formed like 911, like all the different things that we have duplicated services, not just us, the cities, the counties.