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Home My WebLink AboutReports - 2024.04.24 - 41168 AGENDA ITEM: Fiscal Year 2023 Deficit Elimination Plan DEPARTMENT: Fiscal Services MEETING: Board of Commissioners DATE: Wednesday, April 24, 2024 6:00 PM - Click to View Agenda ITEM SUMMARY SHEET COMMITTEE REPORT TO BOARD Resolution #2024-4040 Motion to approve submission of the attached Deficit Elimination Plan to the Michigan Department of Treasury. ITEM CATEGORY SPONSORED BY Report Gwen Markham INTRODUCTION AND BACKGROUND Public Act 140 of 1971 requires that a Deficit Elimination Plan be formulated by the local unit of government and filed with the Michigan Department of Treasury when any governmental fund experiences negative unrestricted fund balance and when any proprietary fund experiences a negative unrestricted net position. Oakland County completed the fiscal year ending September 30, 2023, with six (6) funds with negative unassigned fund balances, which requires submission of a deficit elimination plan. BUDGET AMENDMENT REQUIRED: No Committee members can contact Michael Andrews, Policy and Fiscal Analysis Supervisor at 248.425.5572 or andrewsmb@oakgov.com or the department contact persons listed for additional information. CONTACT Sheryl Johnson, Fiscal Services Officer ITEM REVIEW TRACKING Aaron Snover, Board of Commissioners Created/Initiated - 4/24/2024 AGENDA DEADLINE: 04/24/2024 6:00 PM ATTACHMENTS 1. Deficit Elimination Plan with Charts FY2023 COMMITTEE TRACKING 2024-04-17 Finance - Recommend to Board 2024-04-24 Full Board - Adopt Motioned by: Commissioner Angela Powell Seconded by: Commissioner Robert Hoffman Yes: David Woodward, Michael Spisz, Penny Luebs, Karen Joliat, Kristen Nelson, Christine Long, Robert Hoffman, Philip Weipert, Gwen Markham, Angela Powell, Marcia Gershenson, Charles Cavell, Brendan Johnson, Ann Erickson Gault, Linnie Taylor (15) No: None (0) Abstain: None (0) Absent: Ajay Raman, Michael Gingell, Yolanda Smith Charles, William Miller III (4) Passed OAKLAND COUNTY EXECUTIVE DAVID COULTER Sheryl Johnson, Interim Deputy Chief Financial Officer | Management and Budget (248) 858-0049 | JohnsonSH@oakgov.com 2100 Pontiac Lake Road | County Executive Building 41W | Waterford, MI 48328 | OakGov.com April 17, 2024 Michigan Department of Treasury Local Audit and Finance Division P.O. Box 30728 Lansing, MI 48909 For the fiscal year ending September 30, 2023, Oakland County reports six (6) funds with a negative unassigned fund balance (e.g. a “deficit”). Below, please find a listing of those funds, the amount of the deficit, and a deficit elimination plan: Special Revenue Fund – Friend of the Court $(1,094,714) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. For example, the County pays the original expenses and is reimbursed by the grantor agency after submission of the proper support documentation. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $1,094,714 is offset by unavailable revenue recorded of $1,094,714. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. See attached Friend of the Court plan for FY2024. Special Revenue Fund – Other Grants $(1,025,388) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. For example, the County pays the original expenses and is reimbursed by the grantor agency after submission of the proper support documentation. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $1,025,388 is slightly offset by unavailable revenue recorded of $114,709. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the reimbursement not be sufficient to cover the expenditure, the county has match funds budgeted which will be transferred to cover any remaining deficit. See attached Other Grants plan for FY2024. Special Revenue Fund – Workforce Development Grants $(5,408,468) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. For example, the County pays the original expenses and is reimbursed 2100 Pontiac Lake Road | County Executive Building 41W | Waterford, MI 48328 | OakGov.com by the grantor agency after submission of the proper support documentation. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $5,408,468 is slightly offset by unavailable revenue recorded of $5,372,524. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the reimbursement not be sufficient to cover the expenditure, the county has match funds budgeted which will be transferred to cover any remaining deficit. See attached Workforce Development Grants plan for FY2024. Special Revenue Fund – Judicial Grants $(164,606) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. For example, the County pays the original expenses and is reimbursed by the grantor agency after submission of the proper support documentation. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $164,606 is slightly offset by unavailable revenue recorded of $162,442. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the reimbursement not be sufficient to cover the expenditure, the county has match funds budgeted which will be transferred to cover any remaining deficit. See attached Judicial Grants plan for FY2024. Capital Projects Fund - Lake Levels - Act 146 $(31,041) The negative unassigned fund balance in the Lake Levels - Act 146 Fund relates to the Upper Straights Lake Level Project in the amount of $21,780, and Bush Lake Level project in the amount of $12,545. Upper Straits Lake Level- Design and construction of an augmentation well to maintain the lake level has been started. The expected completion date is sometime in 2024. In 2020, the Oakland County Board of Commissioners approved the Special Assessment District issuance of bonds in the aggregate principal amount of not to exceed $700,000. Full repayment of this debt by the special assessment district is to be collected in 10 annual installments. The $21,780 deficit within the construction fund was caused by project overruns and will be collected through additional annual assessments. See attached Upper Straits Lake Level plan for FY2024. Bush Lake Level- Construction of a new lake level control structure has been completed. In 2010, the Oakland County Board of Commissioners authorized a loan in the amount of $300,000 from the County’s Long Term Revolving Fund to the Bush Lake Special Assessment District to be collected in ten annual installments. The Long-Term Special Assessment for the project commenced in FY 2011. The project cost was more than anticipated and the final collections from the long-term assessment roll are being reviewed. The $12,545 deficit within the construction fund will be covered by additional annual 2100 Pontiac Lake Road | County Executive Building 41W | Waterford, MI 48328 | OakGov.com assessments to be incorporated with the Lake Level maintenance fund assessment. The district will be assessed appropriate additional amounts to ensure the ability to eliminate the deficit within the next five years given the small district size and being mindful on the impact to residents in the district. See attached Bush Lake Level Dam plan spreadsheet for FY2024. Capital Projects - Drain Chapter 4 Construction - Lower Pettibone Drainage District Lower Pettibone Lake Sanitary Chapter 4 Drain Construction Project - A loan from the Long-Term Revolving Fund was approved by the Oakland County Board of Commissioners via Miscellaneous Resolution #14136 adopted June 11, 2014, to provide up to $1,200,000 in funding for this project. A 20- year assessment against each of the benefiting properties in the district has been approved to repay the loan with first payment due December 2014. The construction of the sewer was completed and became operational as of January 2015 and the deficit for this specific project will be eliminated when the long-term assessment roll collection is complete. The long-term receivable is on the balance sheet to track the collection. The deficit for FY2023 is $383,051. See attached Lower Pettibone Drainage District plan for FY2024. We trust that the above demonstrates that Oakland County has sufficient plans in place to eliminate the negative unassigned fund balance reported in the financial records for the fiscal year ending September 30, 2023. Any questions regarding this matter should be directed to my attention at 248- 858-0049, or by e-mail at johnsonSH@oakgov.com. Sincerely, Sheryl Johnson Interim Deputy Chief Financial Officer Department of Management and Budget Oakland County, Michigan cc: Brian Lefler, Chief Financial Officer Jim Nash, County Water Resources Commissioner Friend of the Court FY2023 Deficit Elimination Plan FY2023 (Actuals)FY2024 FY2025 Unrestricted Net Position (Beginning FY)(2,588,261.24) (1,094,714.85) 0.00 Revenue Intergovernmental Program Reimursement 10,772,616.99 12,750,926.00 13,388,475.00 Charges for Services 1,542,939.98 - Other 2,534,378.74 - Transfers In 6,761,392.24 6,568,659.00 6,897,093.00 Total Revenue 21,611,327.95 19,319,585.00 20,285,568.00 Expenditure Salaries and Fringe Benefits 16,273,145.92 15,464,990.00 16,318,175.00 Contractual Services 1,580,487.10 1,353,205.00 1,370,015.00 Commodities 73,048.40 1,254,026.00 1,287,646.00 Internal Support Expenditures 2,191,100.14 1,247,364.00 1,309,732.00 Total Expenditure 20,117,781.56 19,319,585.00 20,285,568.00 Deficit Oct 1, 20xx (2,588,261.24) (1,094,714.85) 0.00 Revenues 21,611,327.95 19,319,585.00 20,285,568.00 Expenditures (20,117,781.56) (19,319,585.00) (20,285,568.00) Add back Prior Year Revenue Unavailable Revenue for FY2023 1,094,714.85 (1,094,714.85) 0.00 - Projected revenue and expenditures for FY2024 and FY2025 are based on the current award contract for the Cooperative Reimbursement Program Other Grants Fund FY2023 Deficit Elimination Plan FY2023 Actuals FY2024 Unrestricted Net Position (Beginning FY)(602,745.32) (1,025,388.20) From PS without Grant worktag 578,500.97 Revenue Federal Grant Revenue 573,211.64 617,920.49 State Grant Revenue 454,743.14 1,614,135.39 Other 30,000.00 Tranfers In Total Revenue 1,057,954.78 2,232,055.88 Expenditure Salaries and Fringe Benefits 386,058.91 147,089.29 Contractual Services 522,406.25 218,437.03 Commodities 331,880.15 250,056.27 Capital Outlay 240,252.35 Internal Support Expenditures - Transfer Out Total Expenditure 1,480,597.66 615,582.59 Deficit Oct 1, 2022 (FY2023)(602,745.32) (1,025,388.20) Revenues 1,057,954.78 2,232,055.88 Expenditures (1,480,597.66) (615,582.59) Add back Prior Year (1,025,388.20) 591,085.09 Amounts for Fiscal Year 2024 are actual revenue collected and expenses incurred through 4/10/2024. This represents collecting of revenue for prior year expenditures. The budget for FY2024 for revenue and expense is $2,686,713. Workforce Development Grants FY2023 Deficit Elimination Plan FY2023 FY2024 Unrestricted Net Position (Beginning FY)(30,176.70) (5,408,467.47) Revenue Federal Grants 11,416,276.86 16,054,532.00 State & Local 2,138,358.19 463,342.00 Other 163,799.29 - Tranfers In - - Total Revenue 13,718,434.34 16,517,874.00 Expenditure Salaries and Fringe Benefits 1,386,367.18 1,635,515.00 Contractual Services 17,390,340.40 14,778,627.00 Commodities 65,297.81 8,700.00 Capital Outlay 101,820.41 95,032.00 Internal Support Expenditures 152,899.31 - Total Expenditure 19,096,725.11 16,517,874.00 Deficit Oct 1, 2022 (FY2023)(30,176.70) (5,408,467.47) Revenues 13,718,434.34 16,517,874.00 Expenditures (19,096,725.11) (16,517,874.00) Add back Prior Year Revenue Unavailable Revenue 5,551,141.34 (5,408,467.47) 142,673.87 The deficit at the end of FY2023 is due to the timing of the federal payments received. The amount had been booked to unavailable revenue for FY2023 and recorded as revenue in FY2024 after it was received. This also explains the $5 million difference between the actuals from FY2023 and the projected revenue for FY2024 Judical Grants FY2023 Deficit Elimination Plan FY2023 (Actuals)FY2024 Unrestricted Net Position (Beginning FY)($148,727.47)($164,606.41) Revenue Federal Grants - - State & Local 1,222,269.07 1,650,448.00 Other - - Tranfers In - - Total Revenue 1,222,269.07 1,650,448.00 Expenditure Salaries and Fringe Benefits 908,998.83 1,036,524.00 Contractual Services 297,714.91 571,071.00 Commodities 31,434.27 42,853.00 Capital Outlay - Internal Support Expenditures - Total Expenditure 1,238,148.01 1,650,448.00 Beginning Fund Balance (10/1/xx)(148,727.47) (164,606.41) Revenues 1,222,269.07 1,650,448.00 Expenditures (1,238,148.01) (1,650,448.00) Refund prior year Expenditures 8,913.45 Unavailable Revenue for FY2023 162,442.57 ($164,606.41)6,749.61 Revenue and Expenditures are projected to increase in FY2024 due to an increase in the grant funding for court programs Oakland County, Michigan Upper Straits Lake Level Deficit Elimination Plan Projection FY 2023 FY 2024 FY2025 Unrestricted Net Position (Deficit) Beginning Balance ($9,103.57)($21,780.46)($11,049.99) Revenues Special Assessment 35,445.07 25,936.24 14,437.76 Charges For Servioces 2,698.83 1,939.73 Interest and Penalty (170.85) (40.97) Total Revenues $37,973.05 $27,835.00 $14,437.76 Expenditures Contractual Services 50,649.94 17,104.53 Interest Expense Total Expenditures $50,649.94 $17,104.53 $0.00 Unrestricted Net Position (Deficit) Ending Balance ($21,780.46)($11,049.99)$3,387.77 Oakland County, Michigan Bush Lake Level Dam Deficit Elimination Plan Projection FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Unrestricted Net Position (Deficit) Beginning Balance ($24,760.00)($12,544.61)($7,294.61)($2,044.61)$3,205.39 Revenues Special Assessments 13,650 6,000 6,000 6,000 6,000 Investment Income 59.86 250 250 250 250 Total Revenues $13,709.86 $6,250.00 $6,250.00 $6,250.00 $6,250.00 Expenditures Interest Expense 1494.47 1000 1000 1000 1000 Total Expenditures $1,494.47 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Unrestricted Net Position (Deficit) Ending Balance ($12,544.61)($7,294.61)($2,044.61)$3,205.39 $8,455.39 Additional assessment to be issued to cover the overall project costs.Additional assessments over the next 4-5 years given the small districe size and Oakland County, Michigan Chapter 4 Drain Construction Deficit Elimination Plan Projection FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 Unrestricted Net Position (Deficit) Beginning Balan $133,215.52 ($383,050.98)($339,153.98)($295,256.98)($251,359.98)($207,462.98)($163,565.98)($119,668.98)($75,771.98)($31,874.98) Revenues Special Assessments 475,044 44,897 44,897 44,897 44,897 44,897 44,897 44,897 44,897 44,897 Investment Income 5,934 Total Revenues $480,978.37 $44,897.00 $44,897.00 $44,897.00 $44,897.00 $44,897.00 $44,897.00 $44,897.00 $44,897.00 $44,897.00 Expenditures Contractual Services 947,180 Internal Services 50,065 Interest Expense - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Total Expenditures $997,244.87 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Unrestricted Net Position (Deficit) Ending Balance ($383,050.98)($339,153.98)($295,256.98)($251,359.98)($207,462.98)($163,565.98)($119,668.98)($75,771.98)($31,874.98)$12,022.02 Special assessments have been issued to cover the overall project costs.Assessments will continue for the next 10 years.The original long term assessment period of 20 years was due to