Alameda County supervisors hear Alameda Health System fiscal update; board to act next week to avert layoffs

County and Alameda Health System (AHS) officials on Tuesday told the Alameda County Board of Supervisors that deferring all program closures and reductions in force through June 30, 2026, will cost an estimated $14,100,000 and asked the board to approve temporary financial adjustments next week to avoid immediate layoffs.

The county administrator opened an oral update at the board's request and said staff had spent weeks reviewing options with AHS leadership, the auditor-controller and AC Health. AHS's CEO, Jackson, described the method behind the $14.1 million figure, saying the calculation uses a fully loaded FTE cost multiplied across 211 positions and then prorated for the remainder of the fiscal year, with an added administrative overhead component to reintegrate staff and cover legal or compliance costs. "So then if you multiply that by 211 FTEs, that is where we get to 48,700,000. We then essentially took a quarter of that because we're talking about the balance of the fiscal year," Jackson said, explaining the step that produced the roughly $12.1 million baseline before administrative costs that together produced the $14.1 million estimate.

County staff laid out three near-term strategies the board could formalize next week: reduce the county behavioral-health contract withhold from 20% to 10% to ease AHS cash flow; suspend scheduled decreases to the county's net negative balance and hold it at $100,000,000 through June 30, 2027; and increase the intra-year flexible maximum from $50,000,000 to $100,000,000 for the next two fiscal years to provide additional borrowing flexibility. The county administrator said staff would return to the board on March 24 with a board letter to formalize these steps.

Supervisors pressed for detail and documentation. "Can we get that in writing?" Supervisor Miley asked after Jackson walked through the math; Jackson said he would provide the supporting figures. Supervisor Tam asked whether administrative leave employees had been reassigned; Jackson said their work had been redistributed while HR works to reintegrate staff and that he would confirm precise counts. Supervisor Fortunato Bass asked whether the average salary and benefit figures used in the calculation were specific to the impacted jobs or an aggregate average; Jackson said he believed the figure represented an aggregate and would confirm.

County staff also reviewed longer-term options discussed with behavioral-health leaders, including renegotiation of the specialty mental-health contract (currently a roughly $81,000,000 contract with a 20% withhold adopted in 2023), technical billing issues related to a state transition to fee-for-service, and alternatives for the intensive outpatient program (IOP). The county's behavioral-health team said it would not take on the IOP program as-is and that evaluating alternate operating models could take six to 12 months.

The board heard that Alameda Health System has an existing permanent repayment agreement with the county's consolidated treasury that runs through June 30, 2034, with scheduled reductions to the net negative balance (the agreement had been scheduled to drop to $95,000,000 and then $90,000,000 in subsequent years). County staff recommended pausing those reductions and increasing intra-year flexibility to provide short-term stability while the ad hoc committee and staff pursue cost reductions and contract fixes.

Board members and AHS leadership agreed to convene an ad hoc working group of supervisors and trustees to continue negotiations; supervisors Miley and Fortunato Bass will serve on that ad hoc committee. Jackson and county staff said they would provide the detailed backing for the $14.1 million estimate and the staff projections used to justify increasing intra-year flexibility.

Next steps: county staff will return to the board with a board letter on March 24 proposing the 10% withhold, the net negative balance adjustment, and the intra-year flexibility increase. The board's ad hoc committee will meet in the coming weeks to develop longer-term options for service models and budget adjustments.

Quotes in context

"So then if you multiply that by 211 FTEs, that is where we get to 48,700,000," Jackson said while explaining the calculations behind the $14.1 million fiscal impact estimate.

"We are going to need some relief from the state," Supervisor Tam said earlier in the meeting during a separate budget update highlighting statewide funding shifts.

What this does and does not do

The actions described are short-term budget and contractual adjustments to provide AHS runway through June 30, 2026; they do not themselves constitute long-term solutions, nor do they represent formal contract renegotiations that would need board approval. The board directed staff to return with formal board action next week; no final contract changes were adopted at Tuesday's meeting.

Sources and provenance

The account above is based on the county administrator's oral update introducing Item 38 (SEG 894'SEG 901), Jackson's presentation of the $14,100,000 estimate and its components (SEG 962'SEG 1024), and the board's subsequent Q&A and discussion (SEG 1026'SEG 1410).