HomeMy WebLinkAboutAgenda - 05-16-2017-12-3 - Information Item - Third Quarter FY2016-17 Financial Report- Period Ending March 31, 2017 INFORMATION ITEM 1
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FINANCE and ADMINISTRATIVE SERVICES
Gail Donaldson,CTP,Chief Financial Office' gonaldson @orangecoimtpnc.gov I 200 S.Cameron Street,Hillsborough,NC 27278 919.245.2151
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: May 16, 2017
Re: Third Quarter FY2016-17 Financial Report-Period Ending March 31,2017
The Third Quarter FY2016-17 report represents the Department of Finance and Administrative Services commitment to
providing important financial reporting to you, the County Manager, and our Residents.
The Major Orange County Operating funds are:
• General Fund
• Enterprise Funds (Solid Waste Fund and Sportsplex Fund)
The quarterly report is presented with a detailed comparison of FY2016-17 Budget versus Actual and FY2015-16 Budget
versus Actual indicating year to date revenues and expenditures performance. The primary goal of this quarterly report is
to communicate a concise financial status of the County's major operating funds.
General Fund Performance
The FY2016-17 Budget included a fund balance appropriation of$12.7 million. This portion of fund balance represents
the assigned fund balance.As of the third quarter it is estimated that$1.3 million of the assigned fund balance will be
used to offset lower revenue estimates for Charges for Services and as a means of meeting budgeted expenditures and
transfers out. The General Fund transfers out are comprised of$876,500 for County Capital and$4.7 million for School
Capital.
Through the third quarter of this fiscal year, General Fund revenues total$183.2 million and General Fund expenditures
total$157.2 million. Property Tax revenues which were collected between September 1,2016 and January 2017, accounts
for 70% of General Fund revenues. The remaining revenues will be derived from sales tax, charges for services, and
intergovernmental revenues. The last sales tax remittance for this fiscal year will be remitted by the North Carolina
Department of Revenue in September 2017 and we will accrue this amount to FY 2016-17.
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General Fund Revenues
Third quarter FY2016-17 General Fund revenues total$183.2 million or 82.0% of budgeted revenues,which is up on a
revenue basis of$2.9 million from 3Q FY2015-16 total of$179.3 million,but is down by a percentage basis of revenues
to revised budget by 2.0%. This percentage decrease is attributed to lower collections currently in Sheriff charges for
services, Emergency Management Services backlog billings, and a reduction in Board of Elections charges for services
collections due to having only one election in FY2016-17 compared to three elections in FY2015-16.
Summary of Major General Fund Revenues
FY2016-17 FY2016-17 YID% FY2015-16 FY2015-16 YID
Category Original Budget Revised Budget YTD Actual Collected Category Original Budget Revised Budget YTD Actual Collected
Property Tax $ 149,498,811 $ 149,498,811 $146,402,344 97.9% Property Tax $ 147,551,332 $ 147,551,332 $144,205,796 97.7%
Local Option Sales Tax 22,066,641 22,066,641 10,729,246 48.6% Local Option Sales Tax 20,652,132 20,652,132 9,863,998 47.8%
Licenses and Permits 328,000 328,000 153,285 46.7% Licenses and Permits 313,000 313,000 147,767 47.2%
Charges for Services 11,681,503 11,900,677 7,506,847 63.1% Charges for Services 10,766,030 10,827,314 7,203,414 66.5%
Intergovernmental 15,787,579 21,772,652 13,438,932 61.7% Intergovernmental 15,000,278 19,852,705 12,398,495 62.5%
Transfers from Other Funds 2,712,600 2,712,600 0 0.0% Transfers from Other Funds 1,052,600 1,052,600 1,052,600 100.0%
Investment Earnings 155,000 155,000 277,379 179.0% Investment Earnings 52,500 52,500 89,868 171.2%
Miscellaneous 886,734 1,034,837 4,703,635 454.5% Miscellaneous 737,468 980,434 4,386,345 447.4%
Fund Balance Appropriation 12,726,944 13,887,964 0 0.0% Fund Balance Appropriation 10,650,770 12,144,614 0 0.0%
General Fund Revenues 215,843,812 223,357,182 183,211,668 82.0% General Fund Revenues 206,776,111 213,426,631 179,348,283 84.0%
Property Tax Revenues
3Q FY2016-17 Property Tax revenues total$146.4 million or 97.9%of budgeted revenues,which is $2.2 million higher
than the 3Q FY2015-16 total of$144.2 million or 97.7% of budgeted revenues. Property Tax revenues are due September
1,with interest and penalties accruing January 2017. The tax office annual billing versus collection rate has historically
been at 99%, and the projected rate for this fiscal year is 99.3%.
Local Option Sales Tax Revenues
3Q FY2016-17 revenues total$10.7 million or 48.6%of budgeted revenues,which is approximately$900,000 above the
3Q FY2015-16 Sales Tax revenues of$9.8 million or 47.8%. This reflects six months of actual collections due to the
timing of receipts from the North Carolina Department of Revenue. The local government sales tax distributions in any
given month reflect actual sales made up to three months prior. For example,August collections reflect July vendor sales,
which are processed and allocated in September,with a local government distribution made on or before October 20. The
October payment was the first month's sales tax distribution allocated to the July-June fiscal year. The December
distribution, as historically is the case,includes a large number of calendar year end refunds,which results in significantly
lower net Sales Tax revenues for that month.
The North Carolina Department of Revenue administers the following monthly disbursement of local option sales taxes
recorded in the County's General Fund:
• Article 39 (one-cent) -authorized in 1971, and is currently allocated on a point of delivery basis.
• Article 40 (half-cent) -authorized in 1983, and is currently allocated on a per capita basis.
• Article 42 (half-cent) -authorized in 1986, and is currently allocated on a point of delivery basis.
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Fiscal Note: Senate Bill 126 in its current form would impact our collections of Article 40 in future fiscal years if this bill
was passed. The fiscal impact in future years is estimated to be between$1.7-2.1 million, the County currently budgets
$6.9 million for Article 40 sales tax proceeds.
Charges for Services
3Q FY2016-17 Charges for Services total$7.5 million or 63.1% of budgeted revenues, as compared with 3Q FY2015-16
total of$7.2 million or 66.5% of budgeted revenues with actual collections in FY2016-17 above FY2015-16 collections in
the third quarter by approximately$303,000. The Charges for Service category is comprised of various departmental fees
for services including Planning and Inspections, Environment,Agriculture,Parks and Recreation,Aging, Sheriff's Office,
Emergency Services, and Register of Deeds. The lower collections by a percentage basis are attributed to Emergency
Service receipts having a lower collection percentage when compared to revised budget as the Tax Office processes
backlog billings as part of transitioning from a third party vendor, lower collections currently in Sheriff charges for
services, a reduction in Board of Elections charges for services collections due to having only one election in FY2016-17
compared to three elections in FY2015-16.
Intergovernmental Revenues
3Q FY2016-17 Intergovernmental revenues total$13.4 million or 61.7% of budgeted revenues, as compared to 3Q
FY2015-16 total of revenues of$12.4 million or 62.5% of budgeted revenues. This source of income includes revenue
received from the Federal, State, and other local governments. Examples of revenue from local governments include
contracts with the Towns of Chapel Hill, Carrboro, and Hillsborough for animal control services, and tax collection
services. The 3Q FY2016-17 performance is consistent with historical performance.
Miscellaneous
The primary revenue variance is attributed to the receipt of Medicaid Hold Harmless funds from the State.
General Fund Expenditures
3Q FY2016-17 General Fund expenditures total$157.2 million or 70.4%of budgeted expenditures, as compared with 3Q
FY2015-16 total expenditures of$153.4 million or 71.9% of budgeted expenditures,with actual expenditures in FY2016-
17 more than FY2015-16 expenditures by$3.8 million. The overall General fund dollar increase in 3Q FY2016-17 is
attributed to increased expenditures of approximately$3.2 million in the Education expenditures for both the Orange
County Schools and the Chapel Hill-Carrboro City Schools. This increase includes the new Health and Safety contracts
which replaced the Fair Funding allocation, as well as additional Current Expense funding in FY2016-17.
Summary of Major General Fund Expenditures
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FY2016-17 FY2016-17 YTD% FY2015-16 FY2015-16 YTD
Category Original Budget Revised Budget YTD Actual Expended Category Original Budget Revised Budget YTD Actual Expended
Community Services $ 13,654,700 $ 14,039,283 $ 9,468,049 67.4% Community Services 12,701,367 $ 12,913,721 $ 8,850,281 68.5%
General Government 10,094,440 10,215,754 7,525,854 73.7% General Government 10,017,348 10,162,711 7,313,651 72.0%
Public Safety 24,596,946 24,803,375 16,614,169 67.0% Public Safety 23,316,875 23,535,712 16,279,007 69.2%
Human Services 37,249,977 42,676,769 28,480,230 66.7% Human Services 36,377,062 41,190,972 28,893,955 70.1%
Education 84,259,340 84,259,340 62,108,244 73.7% Education 78,837,341 78,837,341 58,944,113 74.8%
Support Services 14,058,009 14,417,497 8,515,973 59.1% Support Services 13,470,911 13,739,626 7,894,359 57.5%
Non-Departmental 31,930,400 32,858,410 24,473,421 74.5% Non-Departmental 32,055,206 33,049,297 25,184,628 76.2%
General Fund Expenditures 215,843,812 223,270,429 157,185,940 70.4% General Fund Expenditures 206,776,110 213,429,381 153,359,994 71.9%
Please note that the reporting of Budget versus Actual expenditures is reflected by the following Functional
Leadership Teams:
Community Services-Animal Services,NC Cooperative Extension, DEAPR, Economic Development,Planning and
Inspections, and Orange Public Transportation.
3Q FY2016-17 General Fund expenditures total$9.5 million or 67.4%as compared with 3Q FY2015-16 Community
Services expenditures of$8.8 million or 68.5%,with actual expenditures in FY2016-17 exceeding FY2015-16
expenditures by approximately$600,000. The increase in expenditures is attributed to an increase in expenditures in the
Department of Environment,Agriculture,Parks and Recreation(DEAPR)due to: increased programming in the
Community Centers including additional non-permanent personnel, additional seasonal personnel in the Parks and
Recreation divisions, and less vacant positions in FY2016-17, and in Animal Services due to increased personnel costs
and additional costs in the Animal Supplies operating account. These additional personnel costs are related to being more
fully staffed throughout the year as well as transitioning to a paid overtime for Animal Control Officers in lieu of comp
time(part of a multi-year phase in to eliminate all comp time for Animal Control Officers). The additional costs in the
Animal Supply account directly correlates to the County's court ordered care/boarding of horses related to a criminal
animal cruelty case, the County will be reimbursed for these costs.Non-Departmental increased by$200,000 due to an
increased General Fund contribution to Sanitation operations in FY2016-17.
General Government- Board of Elections, Clerk to the Board, County Attorney, County Manager,Register of Deeds
and Tax Administration
3Q FY2016-17 General Government expenditures total$7.5 million or 73.7% of budgeted expenditures, as compared
with 3Q FY2015-16 total of$7.3 million or 72.0%of budgeted expenditures. The increase in expenditures including
encumbrances are mostly attributed to Board of County Commissioners, Register of Deeds, Tax Administration, and Non-
Departmental. The Board of County Commissioners has spent$58,000 more than the prior fiscal year primarily for
additional cable casting costs and additional contractual services. The contractual services increase includes an
encumbrance for Sound Advice for all of the remaining scheduled meetings for the fiscal year. The Tax Administration
office has spent$70,000 more than the prior fiscal year for costs incurred with preparation and administration of the
County-wide property tax revaluation. Register of Deeds has spent$50,000 more than the prior fiscal year due to being
near fully staffed for a majority of this year. The operating and recurring capital expenditures for the Register of Deeds are
approximately$2,100 higher than the prior year. Non-Departmental has spent$97,350 more than the prior fiscal year due
to costs associated with the 2016 Bond education campaign, and the timing of Stormwater fee payments to the Town of
Chapel Hill for County property.
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Public Safety—Courts, Emergency Services, and Sheriff's Office
3Q FY2016-17 Public Safety expenditures total$16.6 million or 67.0% of budgeted expenditures, as compared with 3Q
FY2015-16 total of$16.3 million or 69.2% of budgeted expenditures. The increase in expenditures in the Sheriff's Office
is attributed to additional positions approved in FY 2016-17, and the timing of contract services payments.
Human Services—Department on Aging, Child Support, Housing, Human Rights, and Community Development,
Library,Public Health and Social Services
3Q FY2016-17 Human Services expenditures total$28.5 million or 66.7% of budgeted expenditures, as compared with
3Q FY2015-16 total of$28.9 million or 70.1%of budgeted expenditures. The Department on Aging expenditures
increased by approximately$150,000 due to Master Aging Planning initiatives, less vacant positions, and information
technology equipment. The Health Department expenditures and encumbrances increased approximately$360,000 due to
increased spending for the Family Success Alliance, the timing of contract services payments, and increased
encumbrances in operations.
The Library Services increased approximately$130,000 due to less vacant positions than during the same period in FY
2015-16, and contract services payments. The overall percentage decrease in the function is also attributed to a payment
timing variance to OPC Area Program and in Non-Departmentals due to the School Health Nurse contract of
approximately$700,000 moving from the Human Services Non-Departmental in FY2015-16 to the Education function in
FY2016-17.
Support Services-Asset Management Services, Community Relations,Finance, Human Resources, and Information
Technology
3Q FY2016-17 Support Services expenditures total$8.5 million or 59.1% of budgeted expenditures, as compared with 3Q
FY2015-16 total of$7.9 million or 57.5% of budgeted expenditures. The increase spending is attributed to the Department
of Asset Management Services (AMS)spending approximately$250,000 more than the prior year primarily due to
supporting storms and inclement weather and multiple unplanned repairs due to incidents (the parking deck fire and the
water leak at the Library). AMS has spent and/or encumbered 76.5%of expenditures this fiscal year as compared to
72.2%in the prior fiscal year. The Department of Information Technology has spent approximately$245,000 more this
fiscal year as compared to the prior fiscal year primarily due to maintenance support for IT contracted services. Finance
and Administrative Services has spent$120,000 more this fiscal year compared to the prior fiscal year primarily due to
less vacant positions during FY 2016-17,payment for a bi-annual actuarial report and timing variances of other contract
services payments.
Education
3Q FY2016-17 Education expenditures total$62.1 million or 73.7% of budgeted expenditures, as compared with 3Q
FY2015-16 total of$58.9 million or 74.8% of budgeted expenditures. The FY2016-17 Education budget was increased by
$5.4 million over the prior year's budget to fund the new Health and Safety contracts which replaced the Fair Funding
allocation, and additional Current Expense allocations. The Education expenditures are comprised of Current Expenses to
the Chapel Hill-Carrboro City School District and Orange County School District. Current Expenses of$57.9 million or
75% of budgeted expenditures was remitted to the school districts through the third quarter; this was $2.4 million more
than the same period in FY2015-16. The remaining Education budget pertains to the Health and Safety Contracts for
Nurses and School Resource Officers, Recurring Capital, and Other Related County Support, specifically support to
Durham Technical Community College(Orange County campus).
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Non-Departmental
3Q FY2016-17 Non-Departmental expenditures total$24.5 million or 74.5% of budgeted expenditures, as compared with
3Q FY2015-16 total of$19.2 million or 76.2%of budgeted expenditures. The Non-Departmental category includes Debt
Service and Transfers to Other Funds. The third quarter expenditures are 1.7%lower than the same period in 3Q FY2015-
16 due to the transfers to other funds have not yet been recorded for this fiscal year. The increase in debt service
payments in 3Q FY2016-17 compared to 3Q FY2015-16 is due to the timing of debt service payments.
In summary, staff continues to carefully monitor General Fund Revenues and Expenditures through the remainder of the
fiscal year to ensure compliance with the adopted FY2016-17 General Fund Budget.
Enterprise Funds Performance
Solid Waste Fund
3Q FY2016-17 Solid Waste Fund performance is consistent with the adopted FY2016-17 budget. Third quarter revenues
are$10.0 million or 62.1% of budgeted revenues and expenses including encumbrances are$11.3 million or 70.0% of
budgeted expenses. This compares with FY2015-16 third quarter revenues of 9.1 million or 73.7% of budgeted revenues
and expenses of$8.5 million or 68.9% of budgeted expenses. The difference in the revenues and expenditures %
compared to 3Q FY2016-17 is due to a $3.1 million encumbrance related to the construction of Eubanks Road waste and
recycling convenience center.
Sportsplex Fund
3Q FY2016-17 Sportsplex Fund performance is consistent with the adopted FY2016-17 budget. The revenue stream is
comprised of Ice Rink(51.3%) of budgeted revenues, Membership and Fitness (42.6%) of budgeted revenues,with the
remaining revenues comprised primarily of Aquatic (44.1%) and Kidsplex(58.3%). The Other Income category includes
revenue received that will be allocated to the appropriate program areas by the close of the fiscal year. Third quarter
Charges for Services or program revenues are$2.5 million or 74.6% of budgeted revenues and expenses are$2.8 million
or 59.6% of budgeted expenses. This compares with the prior year third quarter Charges for Services or program revenues
of$2.5 million or 80.3% of budgeted revenues and expenses of$2.9 million or 84.2% of budgeted expenses. The
difference in both the revenues and expenses percentage is due to the posting of budgeted financing proceeds,which were
not part of the 3Q FY 2015-16 report.