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HomeMy WebLinkAboutResolutions - 2026.04.30 - 42865 AGENDA ITEM: Fiscal Year 2025 Deficit Elimination Plan DEPARTMENT: Fiscal Services MEETING: Board of Commissioners DATE: Thursday, April 30, 2026 6:00 PM - Click to View Agenda ITEM SUMMARY SHEET COMMITTEE REPORT TO BOARD Resolution #2026-6459 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 a negative unrestricted fund balance and when any proprietary fund experiences a negative unrestricted net position. FISCAL IMPACT: No Budget Amendment Needed Committee members can contact Barbara Winter, Policy and Fiscal Analysis Supervisor at 248.821.3065 or winterb@oakgov.com or the department contact persons listed for additional information. CONTACT Candice Giles, Chief Central Fiscal Services ITEM REVIEW TRACKING Aaron Snover, Board of Commissioners Created/Initiated - 4/30/2026 AGENDA DEADLINE: 04/30/2026 6:00 PM ATTACHMENTS 1. Deficit Elimination Plan FY2025 COMMITTEE TRACKING 2026-04-23 Finance - Recommend to Board 2026-04-30 Full Board - Adopt Motioned by: Commissioner Penny Luebs Seconded by: Commissioner Philip Weipert Yes: Charles Cavell, Ann Erickson Gault, Marcia Gershenson, Robert Hoffman, Brendan Johnson, Karen Joliat, Christine Long, Penny Luebs, Gwen Markham, William Miller III, Kristen Nelson, Angela Powell, Robert Smiley, Michael Spisz, Linnie Taylor, Philip Weipert, David Woodward (17) No: None (0) Abstain: None (0) Absent: Michael Gingell, Yolanda Smith Charles (2) Passed OAKLAND COUNTY EXECUTIVE DAVID COULTER Sheryl Johnson, 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 23, 2026 Michigan Department of Treasury Local Audit and Finance Division P.O. Box 30728 Lansing, MI 48909 For the fiscal year ending September 30, 2025, Oakland County reports Seven (7) funds with a negative unassigned fund balance requiring a formal deficit elimination plan (e.g. a “deficit”). Below, please find a list of those funds, the amount of the deficit, and a deficit elimination plan: Special Revenue Fund – Friend of the Court $(1,382,215) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. Typically, reimbursement for year-end expenditures lags by two to three months. The negative unassigned fund balance of $1,382,215 is offset by unavailable revenue of $1,375,565.03 and a prior year revenue adjustment recorded in FY2026. See attached Friend of the Court plan for FY2026. Special Revenue Fund – Multi-organizational Grants fund $(44,842) The negative unassigned fund balance reflects the fact that this grant fund operates on a reimbursement basis. Typically, reimbursement for year-end expenditures lags by two to three months. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the reimbursement not be sufficient to cover the expenditures, the County has match funds budgeted, which will be transferred to cover any remaining deficit. See attached Multi-organizational Grant for FY2026. Special Revenue Fund – Human Service Grants $(1,518,008) This grant fund operates on a reimbursement basis. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $1,518,008 is offset by unavailable revenue of $1,340,120.75 and prior year adjustments of $705,282. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the 2100 Pontiac Lake Road | County Executive Building 41W | Waterford, MI 48328 | OakGov.com reimbursement not be sufficient to cover the expenditures, the County has match funds budgeted, which will be transferred to cover any remaining deficit. Special Revenue Fund – Other Grants $(1,459,002) This grant fund operates on a reimbursement basis. Typically, reimbursement for year-end expenditures lags by two or three months. The negative unassigned fund balance of $1,459,002 is offset by unavailable revenue of $721,865 and prior year adjustments of $737,139. Once reimbursement is obtained, the negative unassigned fund balance will be eliminated. Should the reimbursement not be sufficient to cover the expenditures, the County has match funds budgeted, which will be transferred to cover any remaining deficit. Capital Projects Fund - Lake Levels - Act 146 $(227,780) The Water Resources Commissioners office received a petition from the residents to build an augmentation well for Upper Straits Lake Level. Currently this project is going through a Michigan Department of Environment, Great Lakes, and Energy (EGLE) process for a contested case hearing. Costs associated with the hearing have created a deficit. Annual assessments of the residents will cover these costs over the next 2 years. Capital Projects - Drain Chapter 4 Construction Funds $(288,180) A 20- year assessment against each of the benefiting properties in the district has been approved to repay the loan, with first payment due in 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 fiscal year 2025 is $288,180. In FY25 we received a refund for interest paid on the Internal Loan that exceed the amount due to additional payments, and a larger payment may be made in the future, thus reducing interest expense going forward. Capital Projects – Drainage Districts Capital Projects $(4,137,368) Funding for several Component Unit Capital Project Funds are funded through State Revolving Fund (SRF) Loans. The first draw of FY2026 was received and brought the fund balance out of deficit. The SRF Loans operate similar to reimbursement grant with a delay in funding after the expenditures have been incurred. This delay in funding is the cause of the deficit. Once funds are received the deficit will be eliminated. 2100 Pontiac Lake Road | County Executive Building 41W | Waterford, MI 48328 | OakGov.com 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, 2025. 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 H. Johnson 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 FY2025 Deficit Elimination Plan FY2025 (Actuals) FY2026 (Budgeted) Unrestricted Net Position (Beginning FY)(3,123,282.13) (1,382,215.54) Notes Revenue Intergovernmental Program Reimbursement 11,841,180.43 16,528,599.00 4,687,418.57 40% The FY2026 budget incorporates remaining allocations for ongoing multi-year CRP program grants. Charges for Services 1,147,811.88 1,283,573.00 135,761.12 12% The FY2026 budget incorporates remaining allocations for ongoing multi-year CRP program grants. Transfers In 9,422,833.35 7,248,596.51 (2,174,236.84) -23% The FY2026 budget incorporates remaining allocations for ongoing multi-year CRP program grants. Total Revenue 22,411,825.66 25,060,768.51 2,648,942.85 12% Expenditure Salaries and Fringe Benefits 18,867,696.44 20,414,406.00 1,546,709.56 8% The budget increase is driven from COLA, Merit Increases and Health Care Cost Contractual Services 1,503,008.11 2,058,512.00 555,503.89 37% The budget increase is driven by higher expenditures on multi-year CRP grants. Commodities 93,501.81 205,100.00 111,598.19 119% The budget increase is driven by higher expenditures on multi-year CRP grants and imposed Tariffs Internal Support Expenditures 2,228,469.48 3,081,382.00 852,912.52 38% The budget increase aligns with future programmatic needs. Total Expenditure 22,692,675.84 25,759,400.00 3,066,724.16 14% Deficit Oct 1, 20xx (3,123,282.13) (1,382,215.54) Revenues 22,411,825.66 25,060,768.51 Expenditures (22,692,675.84) (25,759,400.00) Non-Spendable Fund Balance (6,650.51) - Add back Prior Year Revenue 2,028,567.28 705,282.00 Unavailable Revenue for FY2025 1,375,565.03 (1,382,215.54) (0.00) Difference FY2026 to FY2025 % Difference The negative fund balance reflects the reimbursement-based nature of this grant fund, where reimbursements for year-end expenditures typically lag by two to three months. The negative unassigned fund balance is offset by $1,375,565 in unavailable revenue, along with a prior-year revenue adjustment recorded in FY2025. The FY2026 budget is based on an increase in the funding award and higher anticipated costs, including COLA and merit increases, as well as changes in building space allocations. Multi-Organizational Grants FY2025 Deficit Elimination Pla FY2025 (Actuals) FY2026 (Budgeted) Unrestricted Net Position (Beginning FY)(45,389.72) (44,841.56) Revenue Federal Grants 198,697.07 334,711.00 136,013.93 68%The FY2026 budget incorporates remaining allocations for ongoing multi-year Jag program grants. State & Local 2,149,943.8 2,177,538.0 27,594.1 1% Transfers In - 52,027.5 52,027.5 Total Revenue 2,348,640.9 2,564,276.5 215,635.63 9% Expenditure Salaries and Fringe Benefits 1,989,100.1 2,390,449.0 401,348.83 20% The budget increase is driven from COLA, Merit Increases and Health Care Cost Contractual Services 283,133.2 259,270.0 (23,863.21) -8% The budget decline aligns with future programmatic needs Commodities 16,599.4 75,601.0 59,001.6 355% The budget increase aligns with future programmatic needs and expected tariff increase Capital Outlay 24,042.3 - (24,042.38) -100% The budget decline aligns with future programmatic needs Internal Support Expenditure 35,217.61 81,135.0 45,917.39 130% The budget increase aligns with future programmatic needs Total Expenditure 2,348,092.7 2,806,455.0 458,362.23 20% Beginning Fund Balance (10/1/xx)(45,389.72) (44,841.56) Revenues 2,348,640.9 2,564,276.5 215,635.63 Expenditures (2,348,092.77) (2,806,455.00) (458,362.23) Prior year Revenue Adjustmen - 281,773.0 Unavailable Revenue for FY202 5,247.0 (44,841.56) 0.00 Difference FY2026 to FY2025 % Difference Notes This fund operates on a reimbursement basis, and reimbursement for year-end expenditures typically lags by two to three months. Once reimbursement is received, the negative unassigned fund balance will be eliminated. If reimbursement is insufficient to fully cover expenditures, the County has match funds budgeted that will be transferred to address any remaining deficit. Human Services Grants FY2025 Deficit Elimination Plan FY2025 (Actuals) FY2026 (Budgeted) Unrestricted Net Position (Beginning FY)(140,695.98) (1,518,008.65) Notes Revenue Federal Grants 7,626,420.69 9,100,000.00 1,473,579.31 19% The budget increase incorporates unused funding from FY25 LHD Comprehensive Gran State Grants 5,519,599.99 7,500,000.00 1,980,400.01 36% The budget increase incorporates unused funding from FY25 LHD Comprehensive Gran Charges for Services 917.53 - (917.53) Transfers In 45,745.52 41,900.00 (3,845.52) -8% The budget decrease is driven by a reduction of County Match requiremen Total Revenue 13,192,683.73 16,641,900.00 3,449,216.27 26% Expenditure Salaries and Fringe Benefits 6,548,122.54 7,909,096.78 1,360,974.24 21% The budget increase is driven from COLA, Merit Increases and Health Care Cost and the use of FY25 unused LHD Comp Funding Contractual Services 7,009,862.20 7,000,000.00 (9,862.20) 0% Commodities 802,628.78 900,000.00 97,371.22 12% The budget increase is driven by higher expenditures from FY25 unused LHD Comp fund Internal Support Expenditures 489,783.11 500,000.00 10,216.89 2% Lease Expense - - - 0% Subscription Expense - - - Capital Outla 63,523.35 - (63,523.35) -100% Total Expenditure 14,913,919.98 16,309,096.78 1,395,176.80 9% Deficit Oct 1, 20xx (140,695.98) (1,518,008.65) Revenues 13,192,683.73 16,641,900.00 Expenditures (14,913,919.98) (16,309,096.78) Non-Spendable Fund Balance (Deferred Chgs)(2,025.00) - Add back Prior Year Revenue 345,948.58 705,282.00 Unavailable Revenue for FY2025 1,340,120.75 (1,518,008.65) 860,197.32 Difference FY2026 to FY2025 % Difference The negative fund balance reflects the reimbursement-based nature of this grant fund, where reimbursements for year-end expenditures typically lag by two to three months. The negative unassigned fund balance is offset by unavailable revenue, along with a prior-year revenue adjustment recorded in FY2026. Other Grants FY2025 Deficit Elimination Plan FY2025 (Actuals) FY2026 (Budgeted) Unrestricted Net Position (Beginning FY)(192,586.21) (1,459,002.00) Revenue Federal Grants 427,648.06 975,000.00 547,351.94 128% The FY2026 budget incorporates remaining allocations for ongoing multi-year Homeland Security Grant Program grants. State & Local 1,168,054.55 1,590,728.00 422,673.45 26% The FY2026 budget incorporates remaining allocations for MEDC Stretegic Outreach and Attraction Reserve (SOAR) pilot grant. Contributions - 10,000.00 Transfers In 33,686.18 - Total Revenue 1,629,388.79 2,575,728.00 946,339.21 58% Expenditure Salaries and Fringe Benefits 382,137.67 400,000.00 17,862.33 5% The budget increase is driven from COLA, Merit Increases and Health Care Cost Contractual Services 2,171,175.50 2,000,000.00 (171,175.50) -8% The budget decline is driven by lower expenditures on multi-year grants for this expenditure type Commodities 195,658.83 100,000.00 (95,658.83) -49% The budget decline is driven by lower expenditures on multi-year grants for this expenditure type Capital Outlay 351,319.67 50,000.00 (301,319.67) -86% The budget decline aligns with future programmatic needs Internal Support Expenditures 22,857.41 23,000.00 142.59 1% Total Expenditure 3,123,149.08 2,573,000.00 (550,149.08) -18% Beginning Fund Balance (10/1/xx)(192,586.21) (1,459,002.00) Revenues 1,629,388.79 2,575,728.00 Expenditures (3,123,149.08) (2,573,000.00) Prior year Revenue Adjustment 227,344.50 737,139.00 Unavailable Revenue for FY2025 721,865.00 (1,459,002.00) 2,730.00 Difference FY2026 to FY2025 % Difference Notes The negative fund balance reflects the reimbursement-based nature of this grant fund, where reimbursements for year-end expenditures typically lag by two to three months. The negative unassigned fund balance is offset by unavailable revenue, along with a prior-year revenue adjustment recorded in FY2026. Oakland County, Michigan Upper Straits Lake Level Deficit Elimination Plan Projection FY2025 FY202 FY2027 FY202 Unrestricted Net Position (Deficit) Beginning Balanc (66,190.19) (227,779.30) (229,779.30) (54,779.30) Revenue Special Assessment 24,123.81 50,000.0 200,000.0 55,000.0 Charges For Servioces - - - Interest and Penalty (232.41) - - - Total Revenues 23,891.4 50,000.0 200,000.0 55,000.0 Expenditure Contractual Services 183,287.9 50,000.0 25,000.0 - Internal Service Charges 2,192.6 2,000.0 Interest Expense Total Expenditures 185,480.5 52,000.0 25,000.0 - Unrestricted Net Position (Deficit) Ending Balanc (227,779.30) (229,779.30) (54,779.30) 220.7 The Water Resources Commissioners office received a petition from the residents to build an augmentation well for Upper Straits Lake Level. Currently this project is going through a Michigan Department of Environment, Great Lakes, and Energy (EGLE) process for a contested case hearing. Costs associated with the hearing have created a deficit. Annual assessments of the residents will cover these costs over the next 2 years. Oakland County, Michigan Chapter 4 Drain Construction Deficit Elimination Plan Projection FY 2025 (Actuals)FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 Unrestricted Net Position (Deficit) Beginning Balance (347,894.82) (288,179.82) (250,750.82) (213,144.82) (173,860.82) (132,900.82) (90,262.82) (45,948.82) Revenues Special Assessments 32,868.00 33,000.00 33,000.00 33,000.00 33,000.00 33,000.00 33,000.00 33,000.00 Charges for Services 9,181.00 11,600.00 11,600.00 11,600.00 11,600.00 11,600.00 11,600.00 11,600.00 Refund for Overpaid Interest on Loan 70,885.00 Investment Income 3,514.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00 Total Revenues 116,448.00 47,600.00 47,600.00 47,600.00 47,600.00 47,600.00 47,600.00 47,600.00 Expenditures Contractual Services Transfers Out 39,074.00 Internal Services 17,659.00 Interest Expense - 10,171.00 9,994.00 8,316.00 6,640.00 4,962.00 3,286.00 1,609.00 Total Expenditures 56,733.00 10,171.00 9,994.00 8,316.00 6,640.00 4,962.00 3,286.00 1,609.00 Unrestricted Net Position (Deficit) Ending Balance (288,179.82) (250,750.82) (213,144.82) (173,860.82) (132,900.82) (90,262.82) (45,948.82) 42.18 A 20- year assessment against each of the benefiting properties in the district has been approved to repay the loan, with first payment due in 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 fiscal year 2025 is $288,180. In FY25 we received a refund for interest paid on the Internal Loan that exceed the amount due to additional payments, and a larger payment may be made in the future, thus reducing interest expense going forward. Oakland County, Michigan Drain Component Capital Deficit Elimination Plan Projection FY 2025 (Actuals)FY 2026 Unrestricted Net Position (Deficit) Beginning Balance 6,152,336 (4,137,429) Revenues Special Assessments 9,827,350 Federal Grants 12,876,289 6,585,093 Charges for Services 1,266,289 Issuance of Bonds Including Premium 40,353,855 Investment Income 770,760 Other Revneue 350,871 Total Revenues 65,445,414 6,585,093 Expenditures Contractual Services 52,759,072 1,917,017 Commodities 51,285 Internal Services 1,257,805 Transfers Out 9,750,000 Intergovernmental 10,000,000 Total Expenditures 73,818,162 1,917,017 Fund Balance Fund Balance 10/01/2025 6,152,336 (4,137,429) Revenues 65,445,414 6,585,093 Expenses (73,818,162) (1,917,017) Non-Spendable Fund Balance (1,917,017) Unrestricted Net Position (Deficit) Ending Balance (4,137,429) 530,647 SRF Draw Request for FY2025 expenses received January 2026 Funding for several Component Unit Capital Project Funds are funded through State Revolving Fund (SRF) Loans. The first draw of FY2026 was received and brought the fund balance out of deficit. The SRF Loans operate similar to reimbursement grant with a delay in funding after the expenditures have been incurred.