Cuyahoga County projects modest general-fund surplus but falls short of reserve; HHS levy now shows a deficit

Cuyahoga County’s fiscal director told Council members Monday that the county now projects a modest general-fund surplus for 2025 but will likely finish the year below the county’s self-imposed cash-reserve requirement.

The director said other projected revenue totals about $29.2 million and that sales-tax receipts — the county’s largest revenue source at roughly half of general-fund revenues — were 2.3% higher through May compared with last year, narrowing the gap with budgeted expectations. On current projections the director said the county could add roughly $4 million by second quarter if the trend continues.

Still, taking projected revenue and spending together, the director presented a projected general-fund ending cash balance of roughly $132.0 million, about $13.0 million short of the county’s $145.0 million reserve requirement. He emphasized the 2025 budget had been adopted with a $25.0 million structural deficit and that the current projections reflect both that baseline imbalance and first-quarter variances.

The Health & Human Services (HHS) levy fund showed a larger problem. The director reported HHS revenue projected at $281.6 million and expenditures and subsidies around $300.7 million, producing an operating deficit of about $19.2 million and a projected ending cash balance of $21.9 million — about $6.6 million below the fund’s $28.5 million reserve requirement. The presenter called this shortfall “a new situation” compared with recent internal reviews.

A significant driver of the HHS shortfall, the director said, is a sharp rise in property-tax delinquencies. Citing county-treasurer summaries, he said past-due balances increased by roughly $60.6 million when comparing collections for tax-year 2024 with the prior year. The director said he had discussed the spike with Treasurer Brad Chromas and Mike Chambers and offered to provide a municipality-level breakdown of the delinquencies to council members who requested it.

On the expenditure side, the director flagged subsidies to other funds and higher personnel costs in HHS divisions. He said Job & Family Services requires an additional subsidy — about $5.8 million more than budgeted — because of overtime costs as staff work to reduce call-center wait times. He added that leadership is attempting to hire about 82 caseworkers and 10 supervisors beyond authorized staffing to address service backlogs and improve responsiveness. For children in county custody, the director said the county pays contracted providers a per diem for board-and-care; Council members were told out-of-county and out-of-state placements add travel and visitation costs. Council previously approved a $7.0 million increase in board-and-care funding, which the director said has not yet posted as an adjusted line in the reports.

The director also summarized how low reimbursement rates increase net county costs: he estimated reimbursement for children and family services averages roughly 35%, leaving the county to subsidize a large portion of care. He pointed to an approximately $89.3 million budgeted subsidy for the Department of Children and Family Services listed on page 28 of the report.

Beyond HHS, the director said department-level variances produced roughly a $10.6 million projected surplus in the general fund: surpluses in economic development and public works helped offset deficits in the Sheriff’s Office and juvenile court. Special-revenue and grant funds showed larger surpluses tied to timing and multiyear grants, including a $25.4 million HUD-grant-related surplus in housing and a $13.5 million surplus in the fiscal office related to hotel-debt-service accounting.

Council members pressed for additional detail. One member asked where County Council appears in the variance tables; the director pointed to page 25 and an $80,613 projected surplus for Council. Several members requested the municipality- and district-level delinquency detail, and the director agreed to provide the treasurer’s municipality breakdown. They also asked about the county’s online uploads: the director said quarterly reports are automated and offered to follow up on a missing third-quarter 2024 posting.

The county will publish a June report, prepare a second-quarter summary and begin the next biennial budget process, the director said. Council members thanked staff for the walkthrough and emphasized the need to monitor HHS costs, delinquency trends and the sustainability of recent call-center improvements.