HSD ABOVE BASELINE JUSTIFICATION.PDF

HSD FY19 Above Baseline Justification
The Human Services Department (HSD) FY 2019 budget request reflects the Department’s commitment
to County priorities, the Chairman’s initiatives, and the vulnerable populations of Maricopa County.
Unfortunately, the combination of flat grant funding, increased administrative costs, and grant
administrative caps threatens the sustainability of the Department. HSD has and will need ongoing
General Fund support to address this systemic problem.
HSD FY 2019 Budget Submission by Fund
The Department’s total base budget submission for FY 2019 is $60,256,749, which consists of
$2,260,912 in General Funds, $11,350,711 in the CDBG Housing Trust Fund, and $46,645,126 in the
Human Services Grant Fund. Additionally, HSD has budgeted for year 2 of non-operating General
Funding in the amount of $108,881.
The $2.3M in General Funds supports the following HSD activities:
 $750,000 – CASS provision of shelter services on the Human Services campus and homeless
housing throughout the community.
 $312,169 – Contracted community crisis and prevention services, which leverages federal, state,
and local (match) funds.
 $1,198,743 – Senior and disabled adult case management services, which matches federal and
state funded contract; this funds 14 of 30 FTEs who provide these services.
 $108,881 – Non-operating funds for the Homelessness Coordinator who manages contracts and
initiatives. (Year 2 of 3 year funding)
Although HSD is 96% grant funded, the Department prioritizes the utilization of grant funds to support
County goals and mandated services.
1. Smart Justice – HSD is committed to reducing recidivism and increasing public safety through its
Workforce Smart Justice initiative. The Department has committed federal workforce grant
funding and staff to provide employment, training, and case management services to meet the
needs of this population.
2. Homelessness – HSD has been integral in the development of a multi-agency system to address
homelessness not only in Central Phoenix but throughout Maricopa County. By following data-
driven best practices the Department has moved the system from just providing temporary shelter
to creating rapid rehousing opportunities that addresses the cause of homelessness.
3. Economic Development – Through federal workforce grants, the Department increases the
County’s workforce participation rate, while also meeting the needs of employers, through job
training and placement of persons with barriers in key business sectors. In addition, HSD
provides assistance to the Maricopa County Industrial Development Authority and is an active
member to the Pipeline Arizona project.
4. Regional Leadership – With the 117 formalized partnerships HSD expanded in FY 2017, the
Department is able to create regional solutions to address the causes and impacts of poverty
through prevention and crisis response, to create housing options low and moderate income
families can afford, and to prepare children for success in school and as adults. These
partnerships with local cities and towns, community and faith-based organizations, and the
private sector constructs a countywide system in which the responsibility for the needs of the
vulnerable people of Maricopa County is shared amongst partners and is addressed by
leveraging funding.
5. Customer Service – HSD also provides valuable information, referrals, and access to an array of
services through the 22,500 calls the Department receives annually from those living in Maricopa
County.
FY 2019 Budget Sustainability
The FY 2019 budget reflects the necessary rise in County administrative costs coupled with the lack of
additional funds to support County funded programs, which HSD can no longer sustain. Of the nearly $5
million in HSD’s total administrative costs, the County’s administrative allocation represents 60%. This is
an increase of nearly $500,000 from FY 2018 (Figure 1). The driver of these County administrative costs

is Central Service Cost Allocation (CSCA), which is 18% higher than what is being paid in FY 2018. From
FY 2012, CSCA charged to HSD has increased by 114% (Figure 2). It is also worth noting that HSD has
not received County funds for performance or benefit increases over the last eight years for the Senior
and Adult Services Division staff who are General Funded. Since there is no Department level General
Fund administrative resources, HSD’s federal grants support HSD providing leadership on County
initiatives and the administrative costs of General Fund program (e.g. homelessness and Smart Justice).
Continual cost sharing at this level is not feasible for HSD to maintain.
Although HSD has steadily increased its indirect cost rate over the last five years (Figure 3), the available
funding allowed for grant administrative charges (which include both program administration and indirect
costs) is limited. Federal regulations cap the overall administrative charges of HSD’s two largest
programs – Workforce (WIOA) programs at 10% and Head Start programs at 15%. The Department has
already reached the administrative cap in Head Start and Workforce programs, which is expected to
decrease of services in FY 2019. The Head Start program will have with an upward reduction of 83
children and families being served (including a reduction in staff) to absorb the administrative increases.
Both Head Start and Workforce programs will need to increase their vacancy rate, but this impacts
customer service, the ability to meet grant and County requirements, and further reduces administrative
funding. This decrease in services exacerbates the Department’s administrative issue as it will result in a
future reduction in the indirect cost rate and collection of funds towards administrative costs.
The Department has recognized this fundamental problem of funding administrative costs for the past
several years. So in addition to receiving much needed relief from the County for the CSCA increase for
the past two years, HSD has also taken actions to attempt to resolve the administrative costs issue.
1. Internal Efficiencies – HSD has flattened its administrative organizational structure by
eliminating the HR Manager, IT Manager, Financial Support Supervisor as well as other key
positions for a total elimination of eight (8) FTEs. Other administrative costs were also reduced
by completing work in-house rather than through contracts.
2. Program Allocations – HSD implemented the allocation of specific County administrative costs
(such as unemployment and workers compensation) directly to programs as well as costs for
copying, parking, and supplies.
3. Technology Solutions – The Department has implemented technology solutions to reduce
administrative costs, including the Virtual Desktop Infrastructure (VDI) to reduce staff and
equipment needs and also the reduction of cell phone costs saving HSD nearly $100,000.
4. IDCR Negotiation – HSD then successfully negotiated to increase its indirect cost rate in FY
2018 based on a different methodology; the approving federal cognizant agency stated this
method’s approval was unprecedented. This methodology (along with the County’s CSCA
assistance) is allowing the Department to meet the administrative cost demand in FY 2018.
The Human Services Department will continue to explore program efficiencies and grant opportunities
that will allow the Department to be self-sustaining. At this time though, HSD seeks relief from increased
administrative costs for FY 2019 and/or provision of a minimal General Fund base level support for an
estimated amount of $580,209.