HomeMy WebLinkAboutAgenda - 11-12-20; ITEM 1 - Financial Report for the First Quarter of FY 2020-21 ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 12, 2020
Action Agenda
Item No. 1
SUBJECT: Financial Report for the First Quarter of FY 2020-21
DEPARTMENT(S): Finance and Administrative
Services
ATTACHMENT(S): INFORMATION CONTACT:
1. Narrative: Financial Report for the
First Quarter of FY 2020-21
2. PowerPoint
Gary Donaldson, (919) 245-2453
Paul Laughton, (919) 245-2152
PURPOSE: To provide a quarterly financial report to the BOCC and Manager on First Quarter
General Fund, Special Revenue and Enterprise Funds for the period July 1, 2020 through
September 30, 2020.
BACKGROUND: The COVID-19 induced recession resulted in County measures as part of the
FY 2020-21 Adopted Budget. This first quarter report provides a status of Revenue and
Expenditure of the County’s Operating Funds as compared with the prior fiscal year. Budget
versus Actual financial analysis are a key focus to identify and report any material performance
variances.
FINANCIAL IMPACT: There is no financial impact in receiving this Financial Report.
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to
this agenda item:
• GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY
The creation and preservation of infrastructure, policies, programs and funding necessary
for residents to provide shelter, food, clothing and medical care for themselves and their
dependents.
ENVIRONMENTAL IMPACT: There is no environmental impact from approval of this action.
RECOMMENDATION(S): The Manager recommends that the Board of Commissioners receive
this Financial Report.
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FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson, CTP, Chief Financial Officer | gdonaldson@orangecountync.gov | PO Box 8181, Hillsborough, NC 27278 | 919.245.2453
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: November 12, 2020
Re: Financial Report- First Quarter FY 2020-21
_____________________________________________________________________________________
This Financial Report for the First Quarter of FY 2020-21 provides Economic Outlook and Budget versus Actual
variances with comparisons to the prior fiscal year. Greater emphasis is focused on economically sensitive
revenue sources in view of the COVID-19 induced recession.
Near to Mid Term Economic Outlook
Near Term Phase 3- Executive Order 169 which eased public health restrictions represents the near term
economic prospect for governments and businesses. The Phase 3 extension will continue to be monitored in
relationship with any impact on sales tax and charges for services revenues.
Mid Term UNC-Charlotte 2021 Economic Forecast released September 23, 2020 is enclosed for your
review. UNC-Charlotte Economic Forecast the Gross State Product (GSP) at 3.6% for 2021 as compared to a
forecasted GSP of -4.5 % for 2020. The next UNC-Charlotte update is scheduled to be released December 10,
2020.
General Fund Summary (Chart on next page)
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General Fund revenues are 14.7% of budgeted revenues compared to 11.8% the prior fiscal year. The variance
is due to FY 2020-21 Intergovernmental revenues which includes $2.8 million in Round 2 CARES funds and $1.3
million in Deferred Revenues from Round 1 CARES funding from the State via the U.S. Treasury.
General Fund Revenues
• Property Tax collections are 16.5% of the total Property tax budget compared to 14.2% the prior fiscal
year; this represents a timing variance in collections. Real and personal taxes are due September 1 with
peak tax collections occurring in December prior to the assessment of penalties and interest. Assessed
Values for FY 2020-21 by statute are as of January 1, 2020. The property tax category includes real,
personal, and motor vehicle taxes.
• Motor vehicles are 29% of the Motor Vehicle budget as compared to 26% in the prior fiscal year
represents a timing variance. COVID related State legislation allowed taxpayers to delay renewing their
registrations and tax payments for five months from March through August 2020. The FY 2020-21
increase is due to accrued payments over the five month period.
• Motor vehicle taxes are payable on the vehicle renewal date and the tax is based on market value of the
vehicle. The State remits this tax to the County on a monthly basis.
GENERAL FUND Original Budget Revised Budget YTD Actual*Percentage Original Budget Revised Budget YTD Actual*Percentage YTD % Variance +
Property Tax $167,694,880 $167,694,880 $27,769,949 16.56% $165,153,931 $165,153,931 $23,516,712 14.24% $4,253,237 2.32%
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Sales & Use Tax $23,827,353 $23,827,353 $0 0.00% $25,372,861 $25,372,861 $0 0.00% $0 0.00%
Licenses and Permits $274,550 $274,550 $1,945 0.71%$313,260 $313,260 $630 0.20% $1,315 0.51%
Charges for Services $12,645,090 $12,645,090 $2,196,872 17.37% $12,704,833 $12,704,833 $2,644,895 20.82% -$448,023 -3.44%
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Intergovernmental $17,710,005 $22,515,000 $5,702,405 25.33% $18,278,612 $18,719,854 $1,557,262 8.32% $4,145,143 17.01%
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Transfers In $5,486,817 $5,486,817 $0 0.00% $4,034,600 $4,034,600 $0 0.00% $0 0.00%
Miscellaneous $3,139,009 $3,188,204 $216,956 6.80% $3,455,769 $3,658,827 $334,904 9.15% -$117,948 -2.35%
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Appropriated Fund Balance $8,268,603 $8,268,603 $0 0.00% $7,808,006 $7,859,141 $0 0.00% $0 0.00%
Total $239,046,307 $243,900,497 $35,888,127 14.71% $237,121,872 $237,817,307 $28,054,403 11.80% $7,833,724 2.92%
Community Services $14,322,250 $14,395,502 $3,296,522 22.90% $14,421,090 $14,675,219 $3,214,346 21.90% $82,176 1.00%
General Government $10,525,739 $10,719,505 $2,428,703 22.66% $10,556,767 $10,726,427 $3,313,916 30.89% -$885,213 -8.24%
Public Safety $27,994,203 $28,142,669 $6,134,466 21.80% $26,643,096 $26,969,195 $5,731,541 21.25% $402,925 0.55%
Human Services $41,614,328 $42,402,827 $8,198,164 19.33% $40,822,906 $41,573,165 $8,869,548 21.33% -$671,384 -2.00%
Education $93,440,414 $93,440,414 $22,452,704 24.03% $93,508,573 $93,508,573 $22,404,745 23.96% $47,959 0.07%
Support Services $12,773,209 $15,123,079 $6,169,382 40.79% $12,465,362 $11,400,650 $4,009,451 35.17% $2,159,931 5.63%
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Debt Service $33,410,925 $33,410,925 $18,197,238 54.46% $30,754,428 $30,754,428 $12,036,931 39.14% $6,160,307 15.33%
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Transfers Out $4,965,239 $6,265,576 $0 0.00% $7,949,650 $8,209,650 $0 0.00% $0 0.00%
Total $239,046,307 $243,900,497 $66,877,179 27.42% $237,121,872 $237,817,307 $59,580,478 25.05% $7,296,701 2.37%
1 - Property tax collections are attributed to timing of taxpayer payments.
2 - Charges for services decrease due to lower Detention Center bed utilization and Inspection fees due to COVID-19.
3- Intergovernmental represents CARES funds from the State.
4 - Miscellaneous includes County facility lease rentals, donations and lower investment earnings.
5 - Support services increase reflects $1.3 million of Non-Departmental expenditures per capita payments to the towns.
6 - Debt service increase reflects the Series 2019 A and B Bonds to support the County's Capital Improvement Program.ExpenditureNotes:
* - Actual amounts include Encumbrances.
+ - Based on percentage.
FY 2021 FY 2020 FYs 2021 vs 2020
Revenue3
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• Sales Tax has a three-month revenue lag from the NC Department of Revenue (NCDOR) with the first
month of July to be received in October. Note: The County received NCDOR notification of our July Sales
Tax which is 8.2% above the July 2019 sales tax and the August Sales Tax is 4.4% above the August 2019
sales tax. The NCACC Research Center attributes the July and August 2020 sales tax performance to the
following factors:
- Online Sales Tax collections resulting from NCDOR enforcement of online retailers as consumers
increased their Internet purchases.
- Federal Stimulus spending from CARES Payroll Protection Program
- Gradual Easing of Business restrictions
Below is a three-year historical sales tax revenues and the FY 2020-21 budgeted reduction in sales tax in
response to the recession. The FY 2020-21 sales tax budget is -9% below the prior fiscal year after
factoring in the easing of public health business closures.
• Charges for services are 17.4% of the budget as compared to 20.8% lower the prior fiscal year. The
decline is attributed to COVID-19 public health measures for inmate inhabitants at the County Detention
Center which reduced population and commensurate cost recovery from the Federal Government.
Aging, Animal Services and DEAPR, Planning and Inspection fees are slightly lower as well due to COVID-
19 related preventive measures.
• Miscellaneous revenue variance of 6.8% of budgeted revenues as compared to 9.1% the prior fiscal year
is due to the reclassification of $252, 411 in Aging Grants from the General Fund to the Grant Fund. The
timing of Asset Management lease rental revenues for County facilities and lower investment earnings
attributed to interest rate declines.
General Fund expenditures are 27.4% of budgeted expenditures as compared to 25% the prior fiscal year. The
variance is due to an increase in debt service payments as the County funds the County and Schools bonds.
FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 Budget
25,678,025.00$ 27,844,578.66$ 28,126,261.22$ 25,595,372.00$
Percent Change 8.4%1.0%-9.0%
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General Fund Expenditures
• First quarter debt service represents 54.5% of total debt service as compared to 39.1% the prior fiscal
year.
• Series 2019 A and B bonds accounted for an additional $6 million in debt service. These bonds are paid
on October 1 but the bond covenants requires that payments be transferred to the bank trustee five
days prior or by September 25.
• General government represented 22.6% of total general government as compared to 30.9% the prior
fiscal year. This is a timing variance attributed to property casualty and workers compensation premium
being paid in installments as compared to upfront payments in the prior fiscal year.
• Support services represented 40.8% of total support service as compared to 35.2% the prior fiscal year.
The increase reflects $1.3 million in Round 2 CARES funds paid out of a Non-Departmental to the towns.
Retiree Health fund post-employment benefits are now paid from the General Fund this fiscal year
rather than the Health and Dental Fund in the prior fiscal year.
• The remaining Functional Leadership teams are consistent with historical spending rates and compliance
with the County’s proactive measures in response to the COVID related economic crisis.
• Education appropriations are 24% of its budget as compared with 23.9% the prior fiscal year. School
appropriations are paid to both School systems by the 15th of each month. The remaining Education
budget includes School Health and Safety Contracts, Deferred Maintenance, Durham Tech Current
Expense and Recurring Capital.
Summary of Other Funds
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Sportsplex Fund
Sportsplex revenues are 11.4% of budget as compared to 23% the prior fiscal year due to the public health
restrictions. Sportsplex expenditures are 13.6% of budget as compared to 32% the prior fiscal year. FY 2020-21
revenues are $430,999 and expenditures are $516,308 for the first quarter. FY 2019-20 revenues were
$928,467 and expenditures were $901,830 for the first quarter.
The monthly Sportsplex revenues below provides comparative trends for the past two fiscal years and FY 2020-
21 Year-To-Date Actuals and Forecasted October 2020 through June 2021 forecasted. As noted the public
health restrictions has resulted in a revised revenue estimate of $2.2 million. Sportsplex management projects
the months of December and January to peak in revenues due to ice skating activities, ice rink rentals, and a
new adult league hockey season. Sportsplex management will continue with cost containment measures in
response to the revised revenue estimates.
OTHER FUNDS Original Budget Revised Budget YTD Actual*Percentage Original Budget Revised Budget YTD Actual*Percentage YTD % Variance +
29 - Annual Grants Project Fund $149,095 $149,095 $309 0.21%$141,464 $141,464 $22,360 15.81%-$22,051 -15.60%
30 - Multi-Year Grant Projects Fund $631,947 $859,124 $297,630 34.64%$129,765 $427,012 $46,306 10.84%$251,324 23.80%
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32 - Multi-Year Community Development Fund $1,899,076 $2,583,376 $378,419 14.65%$1,724,544 $1,724,544 $5,655 0.33%$372,764 14.32%
33 - Housing Fund $4,448,289 $4,577,659 $1,067,893 23.33%$4,422,324 $4,422,324 $1,180,228 26.69%-$112,335 -3.36%
35 - Emergency Telephone Fund $755,471 $755,471 $125,912 16.67%$768,078 $768,078 $95,538 12.44%$30,374 4.23%
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37 - Visitor's Bureau Fund $1,621,017 $1,751,017 $195,292 11.15%$1,924,380 $1,928,580 $421,944 21.88%-$226,652 -10.73%
38 - Spay/Neuter Fund $82,350 $82,350 $11,312 13.74%$71,726 $79,021 $10,177 12.88%$1,135 0.86%
50 - Solid Waste Enterprise Fund $12,092,884 $12,092,884 $1,906,537 15.77%$11,884,383 $11,884,383 $1,710,296 14.39%$196,241 1.37%
53 - Sportsplex Fund $3,796,991 $3,796,991 $431,000 11.35%$4,025,654 $4,025,654 $928,467 23.06%-$497,467 -11.71%
70 - Employee Health & Dental Fund $14,085,214 $14,085,214 $2,643,732 18.77% $17,114,072 $17,114,072 $2,748,394 16.06% -$104,662 2.71%
29 - Annual Grants Project Fund $149,095 $149,095 $16,170 10.85%$141,464 $141,464 $46,116 32.60%-$29,946 -21.75%
30 - Multi-Year Grant Projects Fund $631,947 $859,124 $150,380 17.50%$129,765 $427,012 $116,093 27.19%$34,287 -9.68%
32 - Multi-Year Community Development Fund $1,899,076 $2,583,376 $1,242,408 48.09%$1,724,544 $1,724,544 $262,929 15.25%$979,479 32.85%
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33 - Housing Fund $4,448,289 $4,577,659 $1,033,899 22.59%$4,422,324 $4,422,324 $1,071,048 24.22%-$37,149 -1.63%
35 - Emergency Telephone Fund $755,471 $755,471 $397,153 52.57%$768,078 $768,078 $146,420 19.06%$250,733 33.51%
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37 - Visitor's Bureau Fund $1,621,017 $1,751,017 $605,721 34.59%$1,924,380 $1,928,580 $847,487 43.94%-$241,766 -9.35%
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38 - Spay/Neuter Fund $82,350 $82,350 $7,646 9.28%$71,726 $79,021 $7,605 9.62%$41 -0.34%
50 - Solid Waste Enterprise Fund $12,092,884 $12,092,884 $3,821,549 31.60%$11,884,383 $11,884,383 $4,123,318 34.70%-$301,769 -3.09%
53 - Sportsplex Fund $3,796,991 $3,796,991 $516,309 13.60%$4,025,654 $4,025,654 $901,831 22.40%-$385,522 -8.80%
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70 - Employee Health & Dental Fund $14,085,214 $14,085,214 $3,051,981 21.67%$17,114,072 $17,114,072 $3,706,465 21.66%-$654,484 0.01%
8 - Emergency Fund fees for two month at higher subscriber fees.
9 - Community Development includes CARES spending to support Emergency Housing Assistance.
10- Emergency Telephone Fund includes $277K in encumbrances for Motorola Communications
7 - Multi-Year Grant includes reclassification of Carol Woods Grant from the General Fund.
11 - Decrease spending in view of lower Occupancy Tax revenues due to COVID-19
12 -Decrease spending in view of lower Sportsplex revenue due to COVID-19RevenueExpenditureNotes:
* - Actual amounts include Encumbrances.
+ - Based on percentage.
FY 2021 FYs 2021 vs 2020FY 2020
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Visitors Bureau Fund
Visitors Bureau revenues are 11.1% of budget as compared to 22% the prior fiscal year due to the public health
restrictions. Visitors Bureau expenditures are 35% of budget as compared to 44% the prior fiscal year. FY 2020-
21 revenues are $195,292 and expenditures are $381,603 for the first quarter. FY 2019-20 revenues were
$421,962 and expenditures were $511,596 for the first quarter.
The monthly occupancy tax revenues below provides comparative trends for the past two fiscal years and FY
2020-21 Year-To-Date Actuals and Forecasted October 2020 through June 2021 forecasted. Staff has identified
contractual expenses in the amount of $327,352 to counter declining revenues however Visitors Bureau fund
balance may still be needed.
$- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000
Jul Aug Sept Oct Nov Dec Jan Feb Mar April May Jun
Sportsplex Monthly Revenues
FY 2018-19 FY 2019-20 FY 2020-21
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Solid Waste Fund
Solid Waste revenues are 15.7% of the total revenues as compared to 14.4% the prior fiscal year. The solid
waste program fee of $142 is billed as a line item on the Property Tax bill. As noted previously, peak collections
occur by the end of December. Solid waste expenditures are 31.6% of total expenditures as compared to 34.7%
the prior fiscal year.
Functional Leadership Teams by Department
Community Services - Animal Services, NC Cooperative Extension, DEAPR, Economic Development, Orange
Public Transportation, Planning and Inspections.
General Government - Board of Elections, Clerk to the Board, County Attorney, County Manager, Register of
Deeds and Tax Administration
Public Safety – Courts, Emergency Services, Criminal Justice Resource Department, and Sheriff’s Office
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Human Services – Department on Aging, Child Support, Housing, Human Rights, and Community Development,
Library, Public Health and Social Services
Support Services - Asset Management Services, Community Relations, Finance, Human Resources, and
Information Technology
Thanks to the Budget Division for their support in the preparation of this quarterly report.
cc: Bonnie Hammersley, County Manager
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Financial Report‐ First Quarter FY 2020‐21November 12, 2020 Board of County Commissioners Work Session.10
Economic Outlook •Near TermPhase 3‐ Executive Order 169 which eased public health restrictions represents the near term economic prospect for governments and businesses. The Phase 3extension will continue to be monitored in relationship with any impact on sales tax and charges for services revenues.•Mid TermUNC‐Charlotte 2021 Economic Forecast released September 23, 2020 is enclosed for your review. UNC‐Charlotte Economic Forecastthe Gross State Product (GSP) at 3.6% for 2021 as compared to a forecasted GSP of ‐4.5 % for 2020. The next UNC‐Charlotte update is scheduled to be released December 10, 2020. 11
General Fund Revenue BudgetProperty Taxes70.3%Sales Tax10.0%Licenses and Permits0.1%Investment Earnings0.2%Miscellaneous1.1%Appropriated Fund Balance3.5%Charges for Services5.3%Intergovernmental7.4%Transfers2.1%12
General Fund Expenditure BudgetGeneral Government (1)11.1%Support Services5.3%Community Services6.0%Human Services17.4%Public Safety11.7%Education (2)46.1%Durham Tech (Orange Campus) (3)0.3%Transfers to Other Funds 2.1%(1) Includes County debt service.(2) Includes CHCCS and OCS current expenses, debt service, short-and long-range capital, health and safety contracts.(3) Includes Durham Technical Community College's current and recurring capital expenses.13
General Fund 14
Property Tax Revenues Property Tax collections are 16.5% of the total Property tax budget compared to 14.2% the prior fiscal year; this represents a timing variance in collections. Real and personal taxes are due September 1 with peak tax collections occurring in December prior to the assessment of penalties and interest. Assessed Values for FY 2020‐21 by statute are as of January 1, 2020. The property tax category includes real, personal, and motor vehicle taxes. Motor vehicles are 29% of the Motor Vehicle budget as compared to 26% in the prior fiscal year represents a timing variance. COVID related State legislation allowed taxpayers to delay renewing their registrations and tax payments for five months from March through August 2020. The FY 2020‐21 increase is due to accrued payments over the five month period. Motor vehicle taxes are payable on the vehicle renewal date and the tax is based on market value of the vehicle. The State remits this tax to the County on a monthly basis. 15
Sales Tax Revenues Sales Tax has a three‐month revenue lag from the NC Department of Revenue (NCDOR) with the first month of July to be received in October. Note: The County received NCDOR notification of our July Sales Tax which is 8.2% above the July 2019 sales tax and the August Sales Tax is 4.4% above the August 2019 sales tax. The NCACC Research Center attributes the July and August 2020 sales tax performance to the following factors: ‐ Online Sales Tax collections resulting from NCDOR enforcement of online retailers as consumers increased their Internet purchases. ‐ Federal Stimulus spending from CARES Payroll Protection Program ‐ Gradual Easing of Business restrictions 16
Sales Tax Annual Trend.Below is a three‐year historical sales tax revenues and the FY 2020‐21 budgeted reduction in sales tax in response to the recession. The FY 2020‐21 sales tax budget is ‐9% below the prior fiscal year after factoring in the easing of public health business closures. FY 2017‐18 FY 2018‐19 FY 2019‐20 FY 2020‐21 Budget25,678,025.00$ 27,844,578.66$ 28,126,261.22$ 25,595,372.00$ Percent Change 8.4%1.0%‐9.0%17
Other General Fund Revenues . Charges for services are 17.4% of the budget as compared to 20.8% lower the prior fiscal year. The decline is attributed to COVID‐19 public health measures for inmate inhabitants at the County Detention Center which reduced population and commensurate cost recovery from the Federal Government. Aging, Animal Services and DEAPR, Planning and Inspection fees are slightly lower as well due to COVID‐19 related preventive measures. Miscellaneous revenue variance of 6.8% of budgeted revenues as compared to 9.1% the prior fiscal year is due to the reclassification of $252, 411 in Aging Grants from the General Fund to the Grant Fund. Thetiming of Asset Management lease rental revenues for County facilities and lower investment earnings attributed to interest rate declines. 18
General Fund Expenditures .General Fund expenditures are 27.4% of budgeted expenditures as compared to 25% the prior fiscal year, this variance is attributed to:•Increase in debt service payments from recent School and County bonds; •General government represented 22.6% of total general government as compared to 30.9% the prior fiscal year and is a timing variance attributed to property casualty and workers compensation premium being paid in installments as compared to upfront payments in the prior fiscal year.•Support services represented 40.8% of total support service as compared to 35.2% the prior fiscal year. Increases reflects $1.3 million in Round 2 CARES funds paid out to the towns. Retiree Health fund post‐employment benefits are now paid from the General Fund this fiscal year rather than the Health and Dental Fund in the prior fiscal year. •The remaining Functional Leadership teams are consistent with historical spending rates and compliance with the County’s proactive measures; •Education appropriations are 24% of its budget as compared with 23.9% the prior fiscal year and paid on the 15thof each month. 19
Other County Funds20
COVID Impact21
COVID Impact22
• Visitors Bureau Fund- Identified $329,000 in additional cost containment measures• Sportsplex Fund- Initiatives include furloughs and discretionary spending• Second Quarter Update and monthly monitoring of key revenue and expensesManagement Response23
Thank you24