County Budgets & Financial Issues. Joe Tuss, Montgomery County Administrator, Andrew Kalmar, Wood County Administrator,

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1 County Budgets & Financial Issues Joe Tuss, Montgomery County Administrator, Andrew Kalmar, Wood County Administrator,

2 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

3 Budget Process Budget appropriations are required under ORC 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 1 st day of each year A temporary budget may be adopted and used until April 1 st, 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 1 st half of any fiscal year cannot exceed 60% of the annual payroll appropriation.

4 General Fund Budget & Spending Controls A board of county commissioners may adopt a spending plan as part of its annual appropriation measure, under 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.

5 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 27 th pay period obligations. For capital projects & the acquisition, construction, or improvement of capital assets for the county.

6 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.

7 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 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

8 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.

9 Budget Calendar(example) May Long Range Financial Forecast ( ) Completed and Adopted May Capital Improvement Plan ( ) 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

10 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.

11 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 courtsupervised juveniles & case management services State has increased its public defender program reimbursements for indigent defense costs

12 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

13 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.

14 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.

15 Options for cutting budgets Across the board reductions must involve review process Debt service payments have 1 st 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.

16 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 ) Cash can be transferred from the General Fund to the Budget Stabilization Fund

17 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)

18 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.

19 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.

20 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.)

21 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?