COLE COUNTY MISSOURI

Transcription

1 COLE COUNTY MISSOURI Budget Officer Recommended Budget For Fiscal Year 2019 Prepared by: Auditor s Office Kristen Berhorst County Auditor

2 Cole County, Missouri 2019 Budget Table of Contents Budget Message Budget Message i General Information Entity Structure and Organization 2 Budget Calendar/Budget Process 3 Organizational Chart 4 County Office Directory 5 Statutory Provisions Governing Circuit Court Budgets 6 Description of the Accounting and Budgeting Systems 7 Description of Funds 8 Overview and Description of Special Revenue Funds 9 Overview and Description of Other Funds 11 Overview and Description of Proprietary Funds 12 Fiscal and Budget Policies 13 Summary of Long-Term Debt 17 Statistical and Demographic Information Largest Employers / Demographic Statistics 19 Assessed Values / Property Tax Rates 20 Summary of Personnel 21 Detailed Operating Budget 22 General Government County Auditor-Dept. No Collector of Revenue-Dept. No Tax Maintenance-Fund No. 300 County Treasurer-Dept. No School Fund-Fund No. 410 Tax Overplus-Fund No. 420 County Clerk-Dept. No Election Services Fund-Fund No. 290 NID Fund-Fund No. 570 County Commission-Dept. No Financial Institution Tax-Dept. No. 820 Domestic Shelter-Fund No Recorder of Deeds-Dept. No Recorder Special-Fund No. 220 GIS-Dept No General Accounts-Dept. No Health Insurance Funding-Fund No. 560 Information Systems-Dept. No Building Maintenance-Dept. No County Planning-Dept. No Health and Welfare Public Administrator-Dept. No Health Department-Dept. No

3 Judicial Circuit Court Clerk-Dept. No Circuit Court Services-Dept No Court Security-Dept. No Child Support Enforcement-Dept. No Public Safety Juvenile Attention Center-Dept. No County Coroner-Dept. No Prosecuting Attorney-Dept. No Training Fund-Fund No. 240 PA Delinquent Tax-Fund No. 280 PA Admin Handling Fee-Fund No. 320 Sheriff-Dept. No Emergency Management Emergency Management-Dept. No Parks and Recreation Parks & Recreation-Dept. No Public Works Public Works Department-Fund No Assessment Assessment Fund-Fund No Law Enforcement Law Enforcement Sales Tax-Fund No Administration-Dept No. 701 Support Services Division-Dept No. 702 Patrol Division-Dept No. 703 Jail Division-Dept No. 704 Training Fund-Fund No. 240 Sheriff Revolving-Fund No. 310 Emergency Services Emergency Medical Services Sales Tax-Fund No Emergency Medical Services Enterprise Fund- Fund No Eugene Water Eugene Fund-Fund No Capital Improvement Sales Tax Fund-Fund No Appropriation Order Draft Copy 116

4 Budget Message November 13, 2018 To the County Commission and Citizens of Cole County: I am pleased to submit the Proposed Budget for Fiscal Year 2019 for Cole County. As is required by statute, this budget document is a complete financial plan for the County as a whole and for each department, office, and court of the County that receives funding in whole or in part from county revenues. Every effort has been made to recommend a budget that provides adequate funding for the services the County must provide while maintaining a sound financial position. The purpose of this budget message is to explain, as much as possible, the basis of the recommendation and to demonstrate how it will keep Cole County financially strong. Budget as a Complete Financial Plan for the County The County Budget is the County s financial plan for More specifically it is the summarized version of the financial plans for five major funds, one enterprise fund, one internal service fund and 14 minor funds. It includes the planned financial results of activities controlled by 13 different elected officials and seven key department heads. Planning and budgeting at the county level is dictated largely by how the County is organized. Cole County is a first class non-charter county with 13 elected officials each with statutorily defined responsibilities and each accountable to the citizens of the County. The various elected officials make budget requests to the Budget Officer (County Auditor) who adjusts them as she sees fit in light of County resources and then prepares a spending plan that she recommends to the Commission. The elected officials define their own goals, objectives and priorities and reflect them in the spending requests made in the annual budgeting process. The Commission has no direct authority to alter or change this process. While they must evaluate spending requests, the Commission cannot impose its will on elected officials. Their influence is made effective in the budgeting process. The resulting budget document reflects substantially a package of individual budgets rather than a unified countywide integrated financial plan for the County. Budget Procedures Preparation of the budget document followed a statutory defined process outlined in Sections to of the Revised Statutes of Missouri and are designed to assure adequate funding for the statutory defined functions of the various offices of Cole County. In accordance with section the various expense and revenue estimates, work programs, and discussions with agency leaders was prepared under the general supervision of the Budget Officer. In accordance with section these data were compiled into a budget document also prepared by the Budget Officer. In accordance with section the budget document is presented to the County Commission and copies made available for public distribution. At least one public hearing by the Commission is required. In accordance with section , after the public hearing or hearings on the proposed budget, the County Commission may make changes in the proposed budget. Changes made by the County Commission must be made public in a prepared statement. The statutes require that the budgeting process be subject to public scrutiny. They require public access to the budget documents and that public hearings are held and considered before the final appropriation order is issued putting the budget into legal effect. Once the budget is adopted it can be amended only in accordance with section and it must follow the same process outlined in to including public notices. Transfers within a given budget are authorized under Sections and i

5 Budgeting Priorities, Goals and Assumptions Understanding the priorities, goals and assumptions that drive the budget are basic to understanding the recommended budget itself. These items are briefly summarized below. Budget Priorities The primary budgeting priority as indicated above is to maintain financial stability in the County. The spending objectives of the County are substantially defined by state law but not the spending priorities. However, public safety, infrastructure and a healthy community all are prerequisites to economic growth and development which, in turn, is fundamental to a thriving community, quality of life, and prosperity. These prerequisite functions are the priority spending objectives of Cole County. County government is labor intensive, highly technical legally and mechanically and critically important to public safety, economic growth and health. Maintaining a high level of productivity and efficiency among the County s workforce also is a high priority. Budgetary Goals The basic operating goal of the County is prompt and effective response to public need using the most efficient combination of resources financially feasible. Goals for the functional areas for the 2019 budget include: Law enforcement: to be capable of responding to all threats to public safety in a timely and effective manner using a well-qualified staff of law enforcement personnel and modern law enforcement practices. Infrastructure: to provide a safe transportation network throughout the County by upgrading, replacing, and constructing the network of County roads, streets, highways and bridges and upgrading equipment to provide maximum response to weather related traffic problems. Health and Welfare: to protect citizens against all types of health threats to the extent possible and to make Cole County a healthy place to live and work for all citizens by providing basic health care needs to those who might not have access to the health care system and to constantly monitor the environment for health hazards and treatment opportunities. Personnel: to be able to attract and retain quality staff dedicated to a culture of discipline and professionalism through sound staffing policies and a compensation structure that recognizes the knowledge, skills, experience and leadership that individuals bring to their positions that make possible the level of efficiency and effectiveness the County seeks in meeting public needs. Local Economic Indicators The basic assumption relative to the economic outlook for Cole County for 2019 is that the Cole County economy will essentially parallel that of the State and Nation. The Missouri State budget for 2019 projects modest growth with revenue projected to increase in real terms about 1.9 percent in 2018 and 2.5 percent in The 2017 State of Missouri projection of 3.0 percent actually came in at 2.6 percent. The assumption for the Cole County budget is that these conditions will characterize all of Most economic forecasts for the national economy call for modest growth through 2018 and then modest growth in There continues to be economic concerns that increase the uncertainty of projected developments in the upcoming years but the outlook over the next two years shows modest growth. Population, income, property values, employment, and commercial activity (as reflected in taxable retail sales) all affect property values and sales taxes and the demand for county services. Reliable, current data on these indicators are not available. However nothing comes to our attention in the data available to indicate that the outlook for the Cole County economy would be materially different from that of the State as a whole. ii

6 The national inflation rate in September 2018 was recorded at 2.3 percent. Prices, except for some fuel and food items, are considered more stable in Cole County. It is expected that the core inflation rate (excludes food and energy) will continue to grow in Projections for Cole County are not available. However the best estimate of the County inflation rate is the national inflation rate projected to be 2.5 percent by the end of It is assumed that inflation locally probably will not show a significant deviation from these trend values. Budgetary Challenges The basic challenge of budgeting is allocating the County s resources to assure that the public goods and services required by law are provided effectively and efficiently while maintaining financial stability. Expenditures such as utilities, insurance, fuel, medical costs, etc., are difficult to control once the long term operating structure is fixed. Personnel costs that make up almost two-fifths of the County s expenditure budget are driven substantially by market conditions. More than two thirds of the County s operating costs are for personnel and supplies. The major source of funding (sales tax) has seen slow but stable growth. Employee Compensation (Total County) The recommended budget includes a small cost-of-living adjustment and some salary structure changes. Traditionally financial planning and budgeting has recognized the importance of attracting and keeping a qualified work force. Although the County has absorbed increases in medical insurance premiums; made adjustments to salary structures where appropriate and endeavored to grant small but prudent cost-of-living adjustments as the basis of its compensation strategy, nevertheless it faces the challenge of changing market conditions for key positions. Employee compensation strategy is a challenge at Cole County because the County has probably the most diverse work force of any organization in the area. The recommendation is based on a careful analysis of the County s financial position and considers the stable situation in revenue and the reserve position in all funds with employee compensation budgets. As a percent of basic operating revenue the overall County reserve ratio is over 30 percent. The County s sound financial position reflects the quality, conscientiousness and efficiency of its employees. The employee compensation recommendation also considers the challenge Cole County faces in keeping and attracting a high quality work force as the key to economic growth and development. Studies consistently show that the availability of quality workers is one of the most important factors in a company s decision on where to locate. Thus the importance of the COLA in maintaining a real wage is a part of this overall strategy. The budget in 2019 also includes some salary structure changes to help keep up with the challenge of changing market conditions for key positions. Budget Highlights The 2019 budget recommended by the Budget Officer includes the following key provisions: Total financial resources available for expenditures of slightly over $79 million. Total planned basic operating expenditures of about $52.3 million. $13.3 million in infrastructure and capital expenditures combined. Over $15.1 million in public safety including law enforcement activities. A salary structure adjustment plus a flat dollar COLA of $520 is proposed for employees, excluding Law Enforcement and EMS employees who recently received salary structure adjustments in The County will continue coverage of health and dental insurance for all full-time employees. Reserves as a percent of total revenue in all major funds are above the target level of 10 to 15 percent. iii

7 Summary of the 2019 Budget Compared to 2018 Budget A summary of the 2019 budget compared to the 2018 budget (Table I) is intended to report information useful to measure accountability for the resources the county employs to achieve its mission as a provider of public goods and services. It reports total financial resources from all sources and in total for all funds combined and compares the budgets for 2018 with the projected and recommended budget for 2019 for the various categories. For the County as a whole total revenue available for expenditures (current revenue plus reserves carried forward) is projected to be about $80 million. Revenue The County receives revenue from a variety of different sources by collecting taxes and charging fees for services. The major sources of funds remain essentially the same taxes and fees that account for over 93 percent of County revenue. In almost all cases the tax rate is set by statute as are the formulas for setting fee rates. Except for financing the new Law Enforcement Center in 2010, the County does not borrow any of its funds for current year operations. The County also has reserves carried forward from prior years that are available for current expenditures. When reserves are combined with operating revenue for the current year total financial resources available to finance activities in 2019 is about $80 million. About $44.5 million of this will be revenue generated from activities of the County in 2019 (Table I). Funds held as reserves from activities in prior years are projected at this time (end of October) to total almost $35.4 million. Transfers represent money accounted for as revenue in one fund but accounted for as expenditures in a different fund. Most of the transfers in 2019 are projected to be from the Emergency Medical Services Fund, where 60 percent of the sales tax is transferred to the General Fund to meet rollback requirements of the Emergency Medical Services Sales Tax. The revenue is recorded only once in the fund in which the tax and/or fee is collected. This accounting procedure causes total financial resources of $88.1 million while the approximate $8.1 million in transfers is not included in the revenue collected (about $44.5 million) and reserves carried forward (about $35.4 million). Almost two-thirds (65.8 percent) of the County s revenue will come from some type of tax. Overall tax revenue is projected to increase about $215,000 in 2019 compared to Over 43 percent of the tax revenue is sales tax revenue. It is projected to be essentially flat for 2019 as compared to projected The second largest source of revenue comes from fees charged for the more than 50 different services the County provides including recording documents, holding elections, collecting taxes for other political jurisdictions, etc. Fees are projected to increase in 2019 mostly due to an increase in fees for the housing of federal prisoners in the jail. Revenue from grants is projected to increase in 2019 as compared to 2018 due to the County receiving Off-system Bridge Replacement Funds (BRO) from the State of Missouri for a bridge project. Expenditures Expenditures are summarized in Table 1 by type of economic resource used as is required by governmental accounting standards. Planned recommended expenditures total about $52.3 million. Transfers are shown as Other financing sources among revenue items and Other financing uses among the expenditure items. This accounting procedure is consistent with accounting standards for governmental entities to serve the purpose of avoiding double counting revenue and expense. Total operating expenditures are projected to be about two percent more in 2019 compared to Grant expenditures are projected to increase about $445,000 due to the BRO funds for the bridge project planned by public works. iv

8 Table I Budget to Budget Comparisons of Source & Use of Funds 2019 and % of total basic 2018 % of total basic Budget revenue/expense Budget revenue/expense FINANCIAL SOURCES: Revenue: Taxes Property tax $ 5,983, % $ 6,038, % Sales tax 19,159, % 18,831, % Use tax 1,489, % 1,350, % Other taxes 2,686, % 2,884, % Total taxes 29,319, % 29,104, % Licenses, fees, & permits 12,393, % 12,195, % Intergovernmental 1,969, % 1,593, % Interest 572, % 337, % Miscellaneous 321, % 383, % Total revenue 44,576, % 43,612, % Beginning reserve 35,399, % 32,516, % Total revenue and reserves 79,976, % 76,128, % Other Financing Sources Transfer in 963, % 940, % Sales tax transfer 5,413, % 4,766, % Law enforcement transfer 1,762, % 1,796, % TOTAL FINANCIAL SOURCES 88,116, % 83,631, % FINANCIAL USES: Expenditures: Personnel services 21,360, % 20,319, % Contractual services 1,595, % 1,714, % Supplies & materials 9,262, % 9,288, % COPs payment 2,853, % 2,855, % Other 3,117, % 3,297, % Capital outlay 13,304, % 13,348, % Debt service 108, % 78, % Grants 773, % 328, % Total expenditures 52,375, % 51,230, % Ending reserve 27,601, % 24,898, % Total expenditures and reserves 79,976, % 76,128, % Other Financing Uses Transfer out 963, % 940, % Sales tax transfer 5,413, % 4,766, % Law enforcement transfer 1,762, % 1,796, % TOTAL FINANCIAL USES $ 88,116, % $ 83,631, % v

9 The major economic resource used by the County to provide services is personnel service costs. Most County business is labor intensive. The cost of personnel services is projected to increase about $1 million in 2019 to total about $21.3 million and represent over 40 percent of total basic expenses. The increase reflects the recommended COLA adjustment and pay structure adjustments to retain and attract a quality work force. The County made some significant pay structure changes to the Law Enforcement and EMS departments in 2018 and have proposed salary structure changes for the other departments in the 2019 budget. Supplies that are mostly in conjunction with capital outlay expenditures as well as the latter are projected to total over $22.5 million combined and require about 43 percent of the County s resources. These three items personnel, supplies and capital outlay are projected to require about 84 percent of the County s total operating expenses projected to be about $52.3 million. Reserves The difference between 2019 projected revenue ($44.5 million) and expenses ($52.3 million) will be financed by drawing down reserves from $35.3 million to $27.6 million (see Table I). Most of the decrease in reserves (about $6.1 million) is in infrastructure funds and the smaller special revenue funds where deficits are due to project timing. The County spent down reserves in the General Fund in 2018 with the purchase of a new health department building. Reserves for the County as a whole are considered above what is generally considered to be a prudent level of about 10 to 15 percent of total revenue. Total ending reserves of $27.6 million is about 61.9 percent of basic total revenue and 31.3 percent of basic expenditures County Budget by Fund The total recommended financial plan for the County in 2019 consists of spending plans for 21 different funds. Standards require that individual budgets and statements are prepared for all major funds. The total for the major funds individually, the minor funds as a group, and the County as a whole required by budget law is summarized in Table II to give a more transparent picture of how the County allocates its financial resources. This allocation is essentially determined by law. The County has five major funds, one enterprise fund, one internal service fund and 14 minor special revenue funds. A major fund is one that accounts for 10 percent or more of the total revenue for governmental funds as a group and five percent of the County s total revenue for all funds. Five funds meet this criterion. All the minor funds are grouped together and shown as all other funds as they generally are small and almost all are special revenue funds. The total revenue of all 14 combined for example is less than 11 percent of the total revenue for the County. Summary of Analysis by Fund Of the total revenue generated by activity during 2019 slightly over $66.9 million (over three-fourths) is revenue restricted to specially designated functions and accounted for in special revenue funds. Almost one-fourth of the activity of the County is processed through the General Fund including over $1.7 million transferred to the Law Enforcement Fund as a subsidy. The Law Enforcement Fund is the largest fund classified as a special revenue fund with activity requiring the use of financial resources totaling about $20.1 million. The largest special revenue fund in terms of basic revenue is the EMS fund operated as an enterprise fund, with total basic revenue of about $9.9 million. General Fund The General Fund is always classified as a major fund. It is the largest fund in terms of total financing resources and third largest in terms of basic operating revenue. At about $8.1 million in operating revenue it accounts for about 18 percent of the revenue the County is projected to collect in Slightly more than two-fifths of the revenue (over 46 percent) is in some form of tax and over one-third of the tax vi

10 revenue is property tax. Fees are projected to total over $2.3 million in Intergovernmental revenue is also a major source of revenue representing about 19 percent of the total basic revenue. General Road & Sales Law Other Total All Fund Bridge Tax Enforcement EMS Funds Funds FINANCIAL SOURCES: Revenue: Taxes Property tax $ 1,239,344 $ 3,980,380 $ - $ - $ - $ 763,898 $ 5,983,622 Sales tax - - 6,386,655 6,386,655 6,386,655-19,159,965 Use tax 1,489, ,489,768 Other taxes 1,055,800 1,200, ,000 2,686,619 Total taxes 3,784,912 5,181,199 6,386,655 6,386,655 6,386,655 1,193,898 29,319,974 Licenses, fees, & permits 2,345, ,000-2,931,635 3,533,631 3,280,349 12,393,160 Intergovernmental 1,549, ,000 19, ,969,600 Interest 175,000 65,000 80, ,000 57,000 65, ,515 Miscellaneous 277,050 11,720-12, , ,670 Total revenue 8,132,418 5,559,919 6,866,655 9,480,379 9,977,786 4,559,762 44,576,919 Beginning reserve 8,337,420 2,676,704 6,542,115 8,830,451 4,077,416 4,935,379 35,399,485 Total revenue and reserves 16,469,838 8,236,623 13,408,770 18,310,830 14,055,202 9,495,141 79,976,404 Other Financing Sources Administrative fee transfer 759,658 20, ,538 Personnel service transfer 102,922 18,000-62, ,271 Interfund transfer ,581,455-1,581,455 Sales tax transfer 3,831, ,831,993 Law enforcement transfer ,762, ,762,653 TOTAL FINANCIAL SOURCES 21,164,411 8,275,503 13,408,770 20,135,832 15,636,657 9,495,141 88,116,314 FINANCIAL USES: Expenditures: Personnel services 8,347,966 2,550,473-5,547,091 4,256, ,313 21,360,892 Contractual services 750,494 75,300 15, , , ,484 1,595,105 Supplies & materials 1,618,839 2,102,946-1,761,300 1,034,839 2,744,387 9,262,311 COPs payment ,853, ,853,000 Other 110, , ,853-1,935,782 3,117,353 Capital outlay 9, ,267 11,013, ,000 1,345,000 2,200 13,304,723 Debt service , ,164 Grants 189, ,080 35, ,692 Total expenditures 11,025,429 5,912,704 11,577,586 11,255,381 7,017,810 5,586,330 52,375,240 Ending reserve 8,337,449 2,176,704 1,637,184 8,830,451 2,893,066 3,726,310 27,601,164 Total expenditures and reserves 19,362,878 8,089,408 13,214,770 20,085,832 9,910,876 9,312,640 79,976,404 Other Financing Uses Table II 2019 Budget Summary by Fund and All Funds Combined Administrative fee transfer 20, , ,000 50, ,333 17, ,538 Personnel service transfer 18, , ,271 Interfund transfer ,581,455-1,581,455 Sales tax transfer ,831,993-3,831,993 Law enforcement transfer 1,762, ,762,653 TOTAL FINANCIAL USES $ 21,164,411 $ 8,275,503 $ 13,408,770 $ 20,135,832 $ 15,636,657 $ 9,495,141 $ 88,116,314 vii

11 On the expenditure side the labor intensive nature of the General Fund is reflected in personnel service costs that represent almost $8 out of every $10 of total expenditures. Supplies account for over 14 percent of the budget and are the second largest category. The transfer out of over $1.7 million to the Law Enforcement Fund is to finance law enforcement activities that are accounted for as expenditures in the Law Enforcement Fund. Road & Bridge Fund The Road & Bridge Fund is the smallest of the major funds and smallest of the special revenue funds. However, 85 percent of the activities of the Sales Tax Fund are managed by personnel of the Road & Bridge Fund. The two funds together represent the bulk of the County s revenue collected for infrastructure purposes and are projected to total about $12.4 million in The property tax is the largest source of revenue in the Road and Bridge Fund (over 71 percent) and taxes in total represent over 93 percent of all revenue. All taxes are special revenue taxes. Expenditures from both funds managed by the personnel of the Road and Bridge Fund are restricted by law and are used mostly for upgrades and maintenance of the County s infrastructure. Supplies and labor expenses account for almost 80 percent of the Fund s expenditures. Sales Tax The Sales Tax Fund is a capital improvement fund. The revenue and expenditures are restricted by law to capital improvement projects including but not limited to infrastructure assets. Its only source of revenue is a sales tax and is distributed between infrastructure and courthouse capital improvements on an 85 percent to 15 percent ratio. All of its expenses are for capital improvement projects. Law Enforcement The Law Enforcement Fund is the second largest of the major funds and largest of the special revenue funds. Its basic revenue of about $9.4 million comes mostly from a special sales tax (over 67 percent) that can be used only for law enforcement purposes including operations and capital improvements. It is a labor intensive operation as personnel costs are the largest operating expense, over $5.5 million of a total expenditure budget of $11.2 million. The second largest expenditure is the debt service payment (over 2.8 million) on the Certificates of Participation that were used to finance the construction of the Law Enforcement Center. Emergency Medical Services (EMS) Fund In terms of total financial sources, the Emergency Medical Services Fund is the third largest major fund and largest of the special revenue funds in terms of total basic revenue. Its basic revenue of about $9.9 million is slightly more than one-fifth (over 22 percent) of the total basic revenue for the County. Most of the revenue is from the sales tax ($6.3 million). However, 60 percent of the tax is transferred to the General Fund by law to implement the property tax roll-back. After the roll back, about $2.5 million in sales tax is available to the Emergency Medical Services Fund to finance activities. Its largest source of operating revenue (after the roll-back) is essentially fees charged for ambulance services which are over one-third of the total. The EMS Fund also is a labor intensive fund with personnel costs of about $4.2 million of a total expenditure budget of almost $7 million. Comparative Expenditures by Type (Resource Used) and by Function The County also reports comparative actual and recommended expenditures by function as well as type in keeping with Generally Accepted Accounting Principles. The total recommended expenditure budget for 2019 increased from 2018 amended budget expenditures, by about a $133,000 difference. Personnel costs are expected to increase by about $1 million in 2019 due to salary adjustments that were approved in 2018 viii

12 for the Law Enforcement Fund and the EMS Fund and new salary adjustments in One of the greatest differences in the 2018 projected total and 2018 budget can be seen in the capital outlay expenditures. The capital outlay expenditures are usually for multi-year road projects that will start in one year but could take more than a year to complete. Expenditures by Resource Used (Personnel, Capital, etc.) Personnel: The Budget Officer projects and recommends personnel costs by position rather than head count. Usually there are positions that remain unfilled for periods of time until suitable replacements are found that causes actual costs to be less than budget. Positions themselves however remain fairly stable. Expenditures on personnel costs in 2018 are expected to be less than 2018 budget by about $971,000 mostly due to attrition and unfilled vacant positions. The difference in the personnel budget for 2019 compared to 2018 reflects salary adjustments and a small COLA amount for employees that did not receive an adjustment in Supplies and Materials: This category includes a vast assortment of items including road materials and law enforcement supplies and for more than 48 different departments and 25 different expense categories of support activities provided for the funds. The recommended expenditure for 2019 is about $171,893 less than the 2018 amended budget. Table III Comparative Expenditures by Resource Used- All Funds Combined Actual Amended Actual Anualized Department Budget Ofcr Expense Budget Expense Expense Budget Requested Expenditure by resource: Personnel services $ 18,973,094 $ 20,338,275 $ 14,182,191 $ 19,366,581 $ 21,345,117 $ 21,360,892 Contractual services 1,599,762 1,783,662 1,242,954 1,540,771 1,781,027 1,595,105 Supplies & materials 7,608,700 9,434,204 6,289,438 7,939,514 9,393,248 9,262,311 COPs payment 2,850,052 2,855, ,948 2,855,300 2,853,000 2,853,000 Other 1,978,952 3,390,865 1,453,597 1,972,035 1,686,265 3,117,353 Capital outlay 5,920,833 13,923,632 6,177,658 7,427,308 11,468,453 13,304,723 Debt service 565,629 78,568 74,020 74,446 98, ,164 Grants 176, , , , , ,692 Total 39,673,311 52,241,732 29,848,881 41,481,742 49,353,019 52,375,240 Contingency - 24,066, ,337,853 27,601,164 Administrative fee transfer 662, , , , , ,538 Personnel service transfer 187, ,260 55, ,217 80, ,271 Interfund transfer 1,031,672 1,000, ,000 1,000,000 2,094,195 1,581,455 Sales tax transfer 3,862,660 3,766,338 2,626,016 3,802,384 3,800,000 3,831,993 Law enforcement transfer 1,899,571 1,796,155-1,796,155 1,796,155 1,762,653 Total $ 47,317,183 $ 83,811,249 $ 33,719,691 $ 49,120,763 $ 73,174,615 $ 88,116,314 Capital and Intergovernmental: The recommended 2019 budget for capital outlays reflects to some extent the timing issue discussed above. Some projects included in the 2019 budget were started in prior years but will be completed in 2019 and there will be some projects started in 2019 that will not be completed until 2020 or later. Since budgeting is on a cash basis and financial reporting on the accrual basis, expenditures frequently do not match the budget amounts. Expenditures on capital items is projected to be about $6.4 million less in 2018 than what was anticipated at budget in The recommended budget for grants increased about $336,000 in 2019 as compared to the budget for Some of the difference in grants is explained by delays between billing and receipt of billings and because a portion of some grants is included in personnel costs. The County also has a bridge project planned that will be paid for partially by BRO funds. ix

13 Expenditures by Function The County also summarizes expenditures by function as is required by law to provide feedback information to the public relative to certain services the County provides to the public referred to as Programs or Functions. Expenditures are summarized by function in Table IV. The basic outcomes the County seeks to achieve with its resources are improvements in public safety, health and welfare and a variety of other outcomes responsive to public need. Table IV Comparative Expenditures by Function- All Funds Combined Actual Amended Actual Anualized Department Budget Ofcr Expense Budget Expense Expense Budget Requested Expenditure by function: General government $ 7,561,115 $ 12,560,226 $ 7,451,748 $ 9,475,685 $ 9,319,537 $ 10,430,253 Health & welfare 7,109,925 7,025,285 4,845,795 6,645,036 9,995,869 8,802,440 Judicial 920,788 1,025, , ,768 1,064,936 1,044,053 Public safety 13,403,013 15,325,484 8,757,076 13,990,676 14,761,571 15,195,982 Emergency management 165, , , , , ,461 Parks & recreation 12,881 11,418 3,395 4,732 11,425 10,226 Highway, streets & bridges 8,912,520 14,841,225 7,140,859 9,215,990 12,959,276 15,713,960 Assessment 886,733 1,076, , ,544 1,026, ,701 Debt Service 700, , , ,216 98, ,164 Total 39,673,311 52,241,732 29,848,881 41,481,742 49,353,019 52,375,240 Contingency - 24,066, ,337,853 27,601,164 Administrative fee transfer 662, , , , , ,538 Personnel service transfer 187, ,260 55, ,217 80, ,271 Interfund transfer 1,031,672 1,000, ,000 1,000,000 2,094,195 1,581,455 Sales tax transfer 3,862,660 3,766,338 2,626,016 3,802,384 3,800,000 3,831,993 Law enforcement transfer 1,899,571 1,796,155-1,796,155 1,796,155 1,762,653 Total $ 47,317,183 $ 83,811,249 $ 33,719,691 $ 49,120,763 $ 73,174,615 $ 88,116,314 Public Safety: The public safety budget includes law enforcement, prosecution and juvenile services. Over $15.1 million more than 29 percent of the recommended 2019 budget will be to finance public safety activities. About 18 percent of law enforcement expenditures (over $2.8 million) are lease-purchase payments to finance the County s Law Enforcement Center. The recommended budget projects a decrease in 2019 of about $130,000 due to the decrease in capital outlay expenditures in 2019 and the loss of some program funding. Highways, Streets & Bridges: The infrastructure category includes activities to maintain the County s over 470 miles of roads and numerous bridges, culvert related structures as well as all related traffic control systems. Therefore, about 30 percent of the County s total expenditures is for infrastructure purposes - upgrading and maintaining the County s infrastructure accounted for in two special revenue funds Road and Bridge Fund and Capital Improvement Fund. Estimated expenditures are planned to increase from budgeted 2018 expenditures by slightly more than $872,000 due mostly to major projects initiated in 2018 but expected to be completed in 2019 or later. General Government: General government includes the support activities including collecting revenue, recording documents, holding elections, accounting, information systems, maintenance, the management oversight activities of the County Commission, etc., necessary to support the primary functions of the County. The County has 48 different departments, 22 different bank accounts, and a fixed asset inventory x

14 with thousands of items valued in total of more than $62.8 million including its infrastructure assets. In 2019 the total cost of general government activities will be over $10.4 million, almost 19 percent of total expenditures. General government expenditures in 2018 included the cost to purchase a new health department building which was a one-time expense. Health and Welfare, Judicial and Assessment: Expenditures on health and welfare, judicial and assessment functions are projected to increase by about $1.7 in 2019 over what is budgeted for Over 79 percent of expenditures in this category are to finance activities of the Emergency Medical Service (Ambulance Service). The increase in expenditures in 2019 is due to an increase in the capital outlay expenses for the EMS Fund and the changes made to the salary structure for EMS employees. In 2019, the County plans to upgrade equipment, software and to purchase two new ambulances. Over $1.5 million finances activities of the County Health Department that provides health care services to the poor including administering the WIC program and various activities of the County s nurses. The Cole County Health Department moved to its new location in September The County does not expect any significant changes in the judicial and assessment functions in Major Fund Analysis Activities of the three largest major funds are summarized in the next three tables. The purpose is to demonstrate any unusual or irregular changes in the County s mission or its financing plans. The major fund analysis above discussed only the budgets for 2018 and The purpose of the discussion of budgets by major fund is to show historical data in addition to the 2019 budget. General Fund The General Fund is the largest single fund and the fund most sensitive to changes in the environment and unexpected changes in internal operations of the County. The data in Table V reflects the stability of revenue over the past two years. The difference between actual basic revenue in 2017 and projected operating revenue for 2018 is about $102,000 a relative difference of less than one percent. Total mixture of operating revenue has not changed significantly since Property tax revenue has stayed about the same the last two years. Revenue from the sales tax transferred in from the Emergency Medical Services Sales Tax Fund (a transfer in) will increase due to an increase in sales tax collections therefore decreasing the property tax levy because of the rollback approved with the EMS Sales Tax. Other tax revenue is expected to decrease slightly in 2019 compared to 2018 mostly due to a decrease in Stock Insurance. Basic expenditures, like basic revenue, also have remained quite stable over the past few years although they have decreased as compared to projected Most of the decrease was in capital outlay expenditures due to the purchase of the new health department building in 2018 that was a one-time cost. The 2019 General Fund expenditures before transfers are projected to be about $1 million more than 2017 actual activity but less than what was budgeted in xi

15 Table V General Fund Revenue and Expenditures Actual Amended Actual Anualized Department Budget Ofcr Activity Budget Activity Activity Budget Requested Revenue: Taxes Property tax $ 1,378,497 $ 1,380,000 $ 1,189,448 $ 1,402,192 $ 1,240,000 $ 1,239,344 Use tax 1,497,472 1,350,000 1,405,097 1,795,272 1,350,000 1,489,768 Other taxes 1,377,051 1,181, , ,251 1,181,000 1,055,800 Total taxes 4,253,020 3,911,000 3,575,922 4,184,715 3,771,000 3,784,912 Licenses, fees, & permits 2,388,937 2,340,445 1,803,017 2,287,289 2,350,583 2,345,545 Intergovernmental 1,484,061 1,643,250 1,027,737 1,574,734 1,548,233 1,549,911 Interest 101, , , , , ,000 Miscellaneous 191, , , , , ,050 Total basic revenue 8,418,513 8,286,286 6,808,201 8,520,676 8,051,566 8,132,418 Beginning reserve - 9,017, ,000,000 8,337,420 Transfer in 4,593,202 4,592,398 3,293,956 4,610,688 4,614,940 4,694,573 Total operating revenue 13,011,715 21,895,825 10,102,157 13,131,364 21,666,506 21,164,411 Expenditures: Personnel services 7,542,614 8,172,524 5,829,752 7,893,080 8,333,089 8,347,966 Contractual services 766, , , , , ,494 Supplies & materials 1,326,255 1,767,523 1,139,304 1,304,487 1,628,399 1,618,839 Other 196, ,453 70,481 97, , ,000 Capital outlay 66,212 1,662,982 1,503,442 1,653,848 22,000 9,000 Grants 126, , , , , ,130 Total basic expenditures 10,024,084 12,906,524 9,335,826 11,976,050 11,090,282 11,025,429 Ending reserve - 7,154, ,000,000 8,337,449 Transfer out 1,945,285 1,835,035 38,880 1,835,035 1,835,035 1,801,533 Total expenditures $ 11,969,369 $ 21,895,825 $ 9,374,706 $ 13,811,085 $ 21,925,317 $ 21,164,411 The General Fund has experienced surpluses in the past few years. A portion of this is due to actual personnel and supply costs being less than budgeted due to unfilled positions and projects planned but not fully implemented. The County decided to spend down reserves in 2018 with the purchase of a new health department building paid for from the General Fund. Activities recommended in the 2019 budget should result in ending reserves in the General Fund (shown as contingency) of about $8.3 million. Reserves at the beginning of 2019 are projected to decrease by the about $679,000 from the beginning 2018 reserves. However, this could and usually does change as there remains two months of activity before the actual 2018 carry forward can be calculated. Law Enforcement Fund The Law Enforcement Fund was created in 2008 to account for activities of the Law Enforcement Program including a Law Enforcement Sales Tax approved by the voters in Over two-thirds of its total operating funds come from the sales tax (Table VI). Other sources of funding include fees, grants and a subsidy from the General Fund. The subsidy is about 9 percent of total operating revenue and about 20 xii

16 percent of total basic revenue. Activities of the Fund are substantially limited by the size and growth in sales tax revenue and fees. The Law Enforcement Fund revenue in the 2019 budget is projecting no growth in sales tax revenue from actual 2018 collections, reflecting the anticipated modest economic growth conditions. Revenue from various services in 2018 is expected to be less than the budgeted amount by about $40,000. Total revenue is only projected to be $20,000 less in 2019 compared to actual revenue in 2018, showing the stability of the revenue in this fund. Table VI Law Enforcement Fund Revenue and Expenditures Actual Amended Actual Anualized Department Budget Ofcr Activity Budget Activity Activity Budget Requested Revenue: Taxes $ 6,325,788 $ 6,277,231 $ 4,892,715 $ 6,386,655 $ 6,337,418 $ 6,386,655 Licenses, fees, & permits 2,527,621 2,563,085 2,074,810 2,922,502 2,948,897 2,931,635 Intergovernmental 20,185 27,820 15,315 20,518 19,689 19,689 Interest 91,215 85, , , , ,000 Miscellaneous 64,281 10,000 17,683 25,940 12,380 12,400 Total basic revenue 9,029,090 8,963,136 7,122,542 9,501,089 9,463,858 9,480,379 Beginning reserve - 8,145, ,830,451 Transfer in 1,951,529 1,857,695 37,974 1,857,695 2,102,452 1,825,002 Total operating revenue 10,980,619 18,965,892 7,160,516 11,358,784 11,566,310 20,135,832 Expenditures: Personnel services 4,814,652 5,324,780 3,668,899 5,010,107 5,574,204 5,547,091 Contractual services 199, , , , , ,655 Supplies & materials 1,419,718 1,729,723 1,322,767 1,589,699 1,754,890 1,761,300 COPs payment 2,850,052 2,855, ,948 2,855,300 2,853,000 2,853,000 Other 112, , , , , ,853 Capital outlay 653, , , , , ,000 Grants 16,022 44,809 28,047 28,047 35,482 35,482 Total basic expenditures 10,065,918 11,271,223 6,286,783 10,673,394 11,230,734 11,255,381 Ending reserve - 7,694, ,830,451 Transfer out ,000 Total expenditures $ 10,065,918 $ 18,965,892 $ 6,286,783 $ 10,673,394 $ 11,230,734 $ 20,135,832 Total operating expenses of the Law Enforcement Fund are projected to increase about $581,000 in 2019 over what was projected for all of Most of this increase is due to the addition of salary adjustments approved by the County Commission in Almost five of every $10 of operating revenue goes for personnel and almost three out of every $10 goes for debt service (lease payment). In 2018, the County also purchased an armored vehicle out of capital outlay for about $160,000 that was a one-time purchase. Reserves at the end of 2019 are projected to be over $8.8 million and well above what is considered prudent for a reserve ratio about 15 percent. xiii

17 Emergency Medical Services Fund The County s ambulance service is accounted for by combining two funds - the Emergency Medical Services Sales Tax Fund and the Emergency Medical Services Enterprise Fund. The tax is special revenue and can be used for emergency medical services. For budget reporting purposes the two funds are consolidated and shown in Table VII below. Basic revenue is revenue earned during the year by activities during the year. The budget estimate for 2019 is over $9.9 million and has decreased about $18,000 over the projected annual total for 2018 (Table VII). The revenue in these two funds is very stable and changes very little from year to year. Revenue in 2019 available to the fund for 2019 activities, after the rollback transfer to the General Fund, will be about $6.0 million. Table VII Emergency Medical Services Revenue and Expenditures Actual Amended Actual Anualized Department Budget Ofcr Activity Budget Activity Activity Budget Requested Revenue: Taxes $ 6,325,781 $ 6,277,231 $ 4,892,660 $ 6,386,655 $ 6,300,000 $ 6,386,655 Licenses, fees, & permits 3,512,739 3,512,000 2,646,431 3,529,630 3,671,462 3,533,631 Intergovernmental 17, Interest 34,985 31,000 51,100 70,992 50,000 57,000 Miscellaneous 7,076 5,000 8,517 8,625 3, Total basic revenue 9,897,662 9,825,231 7,598,708 9,995,902 10,024,962 9,977,786 Beginning reserve - 3,284, ,680,542 4,077,416 Interfund transfer 1,031,672 1,000, ,000 1,000,000 2,094,195 1,581,455 Sales tax transfer out (3,862,660) (3,766,338) (2,626,016) (3,802,384) (3,800,000) (3,831,993) Total operating revenue 7,066,674 10,343,125 5,472,692 7,193,518 11,999,699 11,804,664 Expenditures: Personnel services 3,667,933 3,746,627 2,561,424 3,576,968 4,331,529 4,256,049 Contractual services 341, , , , , ,922 Supplies & materials 835, , , ,754 1,117,725 1,034,839 Other 374, Capital outlay 729, ,150 51, ,150 2,307,869 1,345,000 Total basic expenditures 5,948,497 5,131,056 3,618,459 4,952,983 8,157,848 7,017,810 Ending reserve - 3,901, ,451,873 2,893,066 Transfer out 249, , , , , ,333 Interfund transfer 1,031,672 1,000, ,000 1,000,000 2,094,195 1,581,455 Total expenditures $ 7,229,198 $ 10,343,125 $ 4,391,365 $ 6,400,334 $ 11,999,699 $ 11,804,664 The total expenditures of the two EMS funds are projected to be about $7.0 million in Total basic expenditure needs are about $2.0 million more in 2019 as compared to projected for Most of the increase is due an increase in capital outlay expenses in The County plans to purchase new equipment, upgrade software and purchase two new ambulances in The County Commission also approved shift changes, additional employees and salary adjustments in Over 60 percent of the basic expenditure requirements are for payroll costs. The transfer to the General Fund for rollback purposes will total over $3.8 million and was set by the ballot language when the sales tax was passed by a vote of the people in xiv

18 Total annualized activity for 2018 anticipates a surplus of funds when you combine the EMS Sales Tax Fund and the EMS Enterprise Fund. The result is an increase of anticipated year end 2018 reserves to $4.0 million. However, this could and usually does change as there remains two months of activity before the actual 2018 carry forward can be calculated. At the end of 2019 reserves are projected to decrease to about $2.8 million and slightly more than 47 percent of basic revenue (revenue after the tax rollback). Total Fund Balances by Major Fund and All Funds Combined Fund balances in total and as a percent of revenue by the end of 2019 are projected to be within what are generally accepted prudent boundaries (Table VIII). Budget law requires that the General Fund reserve be at least three percent of total revenue. The Budget Officer s policy is to recommend and attempt to budget to maintain reserves referred to as fund balances at no less than 10 to 15 percent. The Government Finance Officers Association recommends fund balances (reserves) of no less than five to 15 percent of operating revenue or no less than one to two months operating expenses. Table VIII Projected Ending Reserves General Road & Sales Law Other Total All Fund Bridge Tax Enforcement EMS Funds Funds Beginning reserve $ 8,337,420 $ 2,676,704 $ 6,542,115 $ 8,830,451 $ 4,077,416 $ 4,935,379 $ 35,399,485 Total operating revenue 8,132,418 5,559,919 6,866,655 9,480,379 9,977,786 4,559,762 44,576,919 Total transer in 4,694,573 38,880-1,825,002 1,581,455-8,139,910 Total resources available 21,164,411 8,275,503 13,408,770 20,135,832 15,636,657 9,495,141 88,116,314 Total expenditures (11,025,429) (5,912,704) (11,577,586) (11,255,381) (7,017,810) (5,586,330) (52,375,240) Total transfer out (1,801,533) (186,095) (194,000) (50,000) (5,725,781) (182,501) (8,139,910) Projected ending reserve 8,337,449 2,176,704 1,637,184 8,830,451 2,893,066 3,726,310 27,601,164 Operating surplus (deficit) $ 29 $ (500,000) $ (4,904,931) $ - $ (1,184,350) $ (1,209,069) $ (7,798,321) Balance % of operating revenue 102.5% 39.1% 23.8% 93.1% 29.0% 81.7% 61.9% Balance % of total resources 39.4% 26.3% 12.2% 43.9% 18.5% 39.2% 31.3% The target reserve ratio (reserves as a percent of basic revenue) is generally driven by the stability of revenue of the County over the past 10 years or more. The County s main sources of revenue (taxes and fees) grow each year but change very little from year to year. The reserve ratio in the General Fund is estimated to be about 32.9 percent of total resources available to finance activities (operating revenue plus reserves). Reserves as a percent of total revenue in the other major funds are above the 10 percent level. In all funds, including special revenue funds, the revenue generated by the fund constrains what can be spent. Basically the County can spend only what it collects. Managing reserves in the General Fund and the two other major funds sensitive to fixed and variable costs (Law Enforcement and Medical Service) are a little more difficult to manage. Revenues tend to grow arithmetically (about the same amount each year) while some major expenses in these funds grow geometrically (about the same percent each year). The projected operating deficits are believed due to normal situations and policy decisions. The deficits in the Road & Bridge and Sales Tax funds are due to timing difference between starting and completing projects. Some projects in these funds are multi-year projects. The projected deficit in all other funds is due essentially to timing differences in starting and completing projects and funds carried forward from year to year. For example, the beginning reserves in these other funds were over 80 percent of the anticipated revenue they will generate in xv

19 Conclusion The 2019 recommended budget is the financial plan for the County as a whole. Revenues and expenses of all 21 different funds are all balanced with appropriate provision for contingencies. The total County budget amount is projected to be about $79 million including amounts carried forward from prior year s revenue not spent excluding transfers treated as revenue in the County s accounting system. Total potential resources available to cover expenditures total $88.1 million of which about $44.5 million is basic revenue generated by taxes and program activities during Total basic expenditures mostly for programs are about $52.3 million. All projections were based upon estimates by elected officials and department heads and discussions with key individuals and with extensive analytical review of past trends and current and projected economic conditions for the County. They are, however, projections and are subject to assumed conditions actually happening. The local economy is expected to see a modest growth in Sales tax revenue the County s major source of revenue - is projected to remain about the same in 2019 as projected 2018 no growth. All funds will continue to have strong reserves. The Budget Officer would like to acknowledge the outstanding cooperation and assistance given by other elected officials and departments. Also a special thank you goes out to Deputy Auditor, Danielle Patterson for all of her hard work during the budget process. Respectfully, Kristen Berhorst Budget Officer xvi