county budgets & financial issues - ccao county budgets and...2015/02/09 · an annual budget...
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County Budgets
& Financial Issues
Joe Tuss, Montgomery County Administrator,
Andrew Kalmar, Wood County Administrator,
Budget Process
Common Challenges &
Opportunities
Special Conditions
Legal Requirements
Unencumbered Cash vs. Reserve
Balances
Certificates & Estimates of
Resources
General vs. Non-General Funds
Effective Budget Strategies
Budget Process
Budget appropriations are required under ORC 5705.38.
Budget appropriations are authorized by resolutions adopted by the Board of Commissioners as the county’s taxing authority
Budgets authorize and limit how county resources may be spent on operations or improvements.
Budget appropriations may not exceed total resources.
Total resources include the beginning cash balance in a fund plus the revenue estimate for the year, as certified by the budget commission.
An annual budget may be adopted on or about 1st day of each year
A temporary budget may be adopted and used until April 1st , followed by passage of an annual measure.
Supplemental appropriations may be passed as needed during the year.
Appropriations must be classified by fund as well as by office, department, and agency. The amounts appropriated for personnel services and other expenses must also be classified within each of these units.
Current payroll expenditures for the 1st half of any fiscal year cannot exceed 60% of the annual payroll appropriation.
General Fund
Budget & Spending Controls A board of county commissioners may adopt a
spending plan as part of its annual appropriation measure, under 5705.39.2 of the ORC
A spending plan sets forth a quarterly schedule of expenses and expenditures from the county general fund.
Each office, department, and division is limited in its expenses and expenditures during any quarter by the spending plan schedule.
The schedule serves as a limitation during a quarter on contract obligations and purchase orders.
Vacancy credits may be used to reduce personal service appropriations and to recognize normal hiring patterns and attrition rates.
Budget Control Tools & Strategy Annual appropriation measures may include a
contingency reserve balance (unanticipated expenditures) for purposes that could not have reasonably been foreseen.
General Fund carryover balances may be left partially untapped to maintain a reasonable cash reserve per GFOA standards.
Reserve balance accounts may be established for these purposes: To stabilize budgets against cyclical changes in
revenues and spending; For self-insurance program claims payments
and risks; For claims under retrospective rating plans for
workers’ compensation; For accumulated sick, vacation and
compensatory leave payments For 27th pay period obligations. For capital projects & the acquisition,
construction, or improvement of capital assets for the county.
More Budget Control
Tools & Strategy A county administrator, under the direction and supervision
of the board of commissioners, may do the following:
Assist in the administration, enforcement, and execution of the policies and resolutions of the Board;
Recommend measures for adoption to the Board;
Keep the Board fully advised on the financial conditions of the county, preparing and submitting a budget for the next fiscal year.
Multi-year financial forecasts set the stage for annual budgets.
Five Year capital plans balance facility needs with financial capacity.
Budget Outlook Reports may be used to track revenues and expenditures each month, and to weigh needs for amended or supplemental appropriations.
Controls on hiring, travel, and capital spending may be adopted and enforced.
Tax Budget Process & Contents Estimates of next year’s necessary operating expenses,
permanent improvement expenditures, judgments, debt obligations, and special levy expenditures.
Estimates of receipts from general property tax levies and from other revenue sources (Auditor will provide this)
Estimate of unencumbered balances at year-end;
Estimates of taxes levied in excess of the ten-mill limitation (Auditor will provide this)
Tax Budget determines “need” for property tax levies and for the county’s share of the Local Government Fund distribution.
The tax budget is optional for all counties, according to section 5705.281 of ORC
In order for it to be optional, a county budget commission must waive the tax budget process and use the formula distribution for the LGF
Alternate formula for distribution of the LGF must be in place
Budget Process
A capital budget may be approved each year.
Departments initiate capital improvement and capital asset requests
County Administrator recommends capital improvement plans to BOC.
Five year capital plans are updated annually
A capital plan is not legally required, but is highly recommended as a financial management tool and “best practice”.
Budget Calendar(example)
May – Long Range Financial Forecast (2013-2017) Completed and Adopted
May – Capital Improvement Plan (2013-2017) Completed & Adopted
June – Tax Budget Completed and Adopted
July – Next Year’s Budget requests & IT Plans Due from elected officials, department and agencies
July – Current year estimates & Next year forecasts are discussed at monthly meeting of County Elected Officials
August – Meetings with Agencies and County Administrator to review next year’s budget requests
Budget Calendar (example)
October – Recommended Appropriations reviewed with BOC and provided to agencies and public
November – BOC considers agency request and appeals in re: Recommended Appropriations.
November – BOC deliberates Recommended Appropriations
December – Review Final Appropriations changes and priorities with BOC
Mid-December – County Administrator presents Final Appropriations to BOC at its General Session
The Appropriation measure is filed with the Clerk and County Auditor, who “opens” the books for next year’s business.
Common Pleas Court
Challenges & Opportunities CPC can seek an appellate court action to
order an appropriation that is reasonably necessary to meet all of CPC’s administrative expenses. Burden of proof on BOC.
Federal child support program initiatives – maximizing IV-D administrative reimbursement & bonus incentive revenues
Juvenile Court –using Reclaim Ohio grant revenues for community-based treatment and prevention programs
Foster Care IV-E program revenues for court-supervised juveniles & case management services
State has increased its public defender program reimbursements for indigent defense costs
Sheriff’s Office
Challenges & Opportunities
Prisoner housing contracts, costs, and rates
Prisoner medical and prescription drug costs
Contracts & service levels for road patrol and crime prevention are defined under ORC
Impacts of State and Federal Mandates
Labor relations, bargaining agreements, and dispute resolution issues
State Jail Inspections & Citations
Veterans Service Commission
Challenges & Opportunity
Requirement for up to .5 mill of inside
property tax receipts of General Fund
must be necessary and reasonable.
Must follow appropriation format
prescribed by BCC
Legal appropriation requests must be
granted, if reasonable
Veterans relief allowances
Indigent burial plots and gravesite
maintenance.
Challenges – Mandated Share
County General Fund must
pay Mandated Share of
public assistance costs
pursuant to ORC and the
ODJFS Director’s certification.
Year-over-Year increase is
capped at 105%
Mandated share must be
transferred at least quarterly.
Options for cutting budgets
Across the board reductions must involve review process
Debt service payments have 1st priority.
Capital related line items may be cut.
Compensation may be frozen.
Employee insurance premiums may be increased (Consider ACA requirements)
Health insurance co-pays, deductibles, & coverage limits may be changed.
Hiring freezes, furloughs, or lay-offs may be imposed.
Cash Balances & Budget
Stabilization Fund
Fund balance is the un-appropriated cash in General Fund
Budget Stabilization Fund is a separate reserve account established Inside the General Fund and by a BOC resolution (ORC 5705.13)
Cash can be transferred from the General Fund to the Budget Stabilization Fund
Fund Balances & Budget
Stabilization Fund
Both balances lend stability to a
county’s financial condition and bond
ratings
Adopt cash reserve levels and policies
Policy can bring stability to investment
income receipts
Utilization during economic slowdown,
emergency or temporary loss of
revenues (one-time)
Revenue Projections
Avoid General Fund commitments for ongoing costs from one time revenue sources.
Stick with conservative earnings estimates due to continued low rates of return on Treasury investments.
Don’t expect more Local Government Fund revenue in the State’s next budget cycle.
Expect continued State reimbursements for Public Defender Office operations.
Rely on Wireless-911 fees for ongoing PSAP support.
Growing sales tax & transfer tax revenues may boost your General Fund revenues this year and next.
Casino taxes are general purpose revenues & may be used for operating support or capital projects.
Revenue Projections
Review and work to maximize General Fund
revenue sources
Where permitted, bill central service charges
(indirect costs) to Special Purpose Funds to
maximize your General Fund reimbursements.
Direct-bill insurance & benefits if allocations are
not permitted to recover costs.
Where permitted, use service contracts to cover
services for IT, Microfilm, Communications, and
Facility rental and maintenance support for non-
General Fund sources.
Special fund surpluses may be declared by
County Officials to offset General Fund budget
cutbacks.
Effective Budget Strategies
Engage in multi-year financial planning
Estimate revenue sources conservatively
Develop policy for fund reserve balances
Utilize budget parameters or inflation factors for all General Fund elected officials, agencies and departments
Where possible, move functions with restricted revenue sources out of the General Fund (Dog Shelters, Building Inspection, Solid Waste, Auto Title, etc.)
Closing Thoughts
Adopt a budget that is
structurally balanced.
Current revenues cover current
expenditures.
Carry-over balances cover
capital items, debt, or one-time
items.
Questions?
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