Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Subject: FY 2026-27 Recommended Budget
RECOMMENDATION:
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Adopt a resolution approving the FY 2026-27 Recommended Budget submitted by the County Executive.
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BACKGROUND:
The County Budget Act (Government Code §§ 29000-29144) requires that counties have a recommended budget, approved by the Board of Supervisors, in place on July 1 of each fiscal year (FY). Select provisions of the applicable Government Code sections relevant to this part of the budget process are as follows:
GC § 29062 - The recommended budget shall be submitted to the board by the administrative officer or auditor as designated by the board, on or before June 30 of each year, as the board directs.
GC § 29063 - Upon receipt of the recommended budget, the board shall consider it and, on or before June 30 of each year, at such time as it directs, shall make any revisions, reductions, or additions. Any official or person whose budget requests have been revised shall be given the opportunity to be heard thereon before the board during or prior to the hearings required by Section 29080.
GC § 29064(a) - Except as provided in subdivision (c), on or before June 30 of each year the board, by formal action, shall approve the recommended budget, including the revisions it deems necessary for the purpose of having authority to spend until the budget is adopted.
DISCUSSION:
The County’s FY 2026-27 Recommended Budget totals $5.2 billion and 5,945 positions for all County funds, a net increase of $652 million or 14.3 percent and net increase of 61 positions from the FY 2026-27 Adopted Preliminary Budget that was approved by this Board in September 2025. The FY 2026-27 Recommended Budget includes some updated funding and position adjustments. Final Fund Balance adjustments will be made in connection with the September Revisions that will form the County’s Adopted Budget for FY 2026-27.
The FY 2026-27 Recommended Budget is submitted with this memorandum. Notable budget adjustments reflected in the FY 26-27 Recommended Budget include:
• State and Federal Policy Changes: To reflect recent federal and Medi-Cal policy changes, the San Mateo Medical Center (SMMC) will adjust its budget to freeze Medi-Cal enrollment for individuals with Unsatisfactory Immigration Status (UIS) and account for the elimination of Prospective Payment System (PPS) reimbursement and dental coverage for UIS adults. These changes may increase the number of uninsured patients and demand for care. In response, SMMC will reduce salary, benefits, and extra help costs and revise intergovernmental and program revenues. These ongoing adjustments total $3.7 million and take effect July 1, 2026.
• Navigating Fiscal Adjustments: County Health’s Public Health Policy and Planning (PHPP) division anticipates a $7 to $9 million shortfall as grant funding sources wind down. County Health is continuing to refine a multi-year strategy to address the gap and will present a detailed plan as part of the September budget process.
• Strengthening Departmental Fiscal Stability: The Sheriff’s Office, in coordination with the County Executive’s Office, will receive a one-time Year-End Fund Balance allocation to support progress toward meeting required reserve levels. The County Executive’s Office will continue oversight to ensure progress toward the department’s two percent reserve target, with final adjustments reconciled at year-end.
• Maintaining Core Services and Operations: The Sheriff’s Office will invest $800,000 in one-time funding for extra help staff to reduce the backlog of concealed carry weapon permit applications and improve service delivery.
• Infrastructure and Community Safety: Beginning July 1, 2026, the County will provide a one-time $750,000 contribution from Non-Departmental Services/General Fund for the Moss Beach SR-1 Congestion and Safety Improvements Project. The funding serves as a required local match for a $6.75 million grant application through the San Mateo County Transportation Authority and supports multimodal transportation and pedestrian safety improvements in Moss Beach.
• Technology and System Improvements: Beginning July 1, 2026, the County will make several one-time technology investments to improve systems and service delivery, including:
o SamCERA: $10 million pension administration system upgrade
o Sheriff’s Office: $2.5 million jail management system replacement funded by Proposition 172
o Technology Services Department (TSD): investments in Human Resources systems, information technology (IT) enhancements, server upgrades, and infrastructure replacement
o County Executive’s Office: investments in artificial intelligence (AI) functionality for the County budget system, Salesforce assessment appeals portal maintenance, and a new agenda management software solution for Board of Supervisors records and meetings
The County Attorney has reviewed and approved the proposed resolution as to form.
COMMUNITY IMPACT:
The FY 2026-27 Recommended Budget allocates resources to essential services such as healthcare, education, and social welfare, ensuring access for all residents regardless of socioeconomic status. Investments in infrastructure and capital projects reflected in the budget focus on serving vulnerable populations which will have a positive impact on these communities. Public input has been sought in key decisions relating to the budget allocations.
FISCAL IMPACT:
The FY 2026-27 Recommended Budget for all funds totals $5,222,428,565 and 5,945 authorized positions. Reserves total $785,459,394 (17.7 percent of Net Appropriations).
The FY 2026-27 Recommended Budget for the General Fund totals $3,783,739,173 and 4,772 authorized positions. General Fund Reserves total $572,721,819 (17.8 percent of Net Appropriations).