HomeMy WebLinkAboutAgenda 02-17-22; 12-2 - Information Item - Financial Report-Second Quarter FY 2021-22 1
ORANGE COUNTY
NORTH CAROLINA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaidson@orangecountync.gov I PO Box 8181, Hillsborough, NC 27278 919.245.2453
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: February 17, 2022
Re: Financial Report- Second Quarter FY 2021-22
Please find below a summary of FY 2021-22 second quarter financial report for the General Fund, Enterprise Funds,
Special Revenue Funds and the UNC-Charlotte Economic Update from Dr. John Connaughton available electronically. The
notes at the end of the financial report beginning on page two provides variance explanations for revenues and
expenditures.The variance compares the current fiscal year year-to-date results with the prior fiscal year.
American Rescue Plan Act(ARPA) Update
The Treasury Department released the Final Rule for permissible use of American Rescue Plan Act Recovery Funds. The
final rule is effective April 1, 2022 but guidelines can be used retroactively to March 2021 when the funds were first
authorized.The final rule provides much more clarity regarding eligibility of projects, loosens many of the administrative
requirements from the interim rule, and broadens our ability to use funding for capital projects, cybersecurity, and
broadband. The change that has the potential for the most benefit to Orange County is a rewrite of the "lost revenue"
provision.Jurisdictions are now allowed to either take an allowance of up to$10 million of lost revenue (with the
presumption that over the course of the pandemic jurisdictions will see some lost revenue up to that amount) or can
choose to complete the official revenue loss calculation in order to claim more than $10 million. It is in Orange County's
best interest to use the $10 million lost revenue allowance.The allowance up to $10 million may be used for general
government services that may not be otherwise included in the existing eligibility categories but cannot be used for fund
balance, debt service, or pension contributions. The Finance Department has submitted the first quarterly expenditure
report to the Treasury Department as of January 31,2022 showing$1,764,816.53 spent between the periods of March 1,
2021— December 31, 2021. The National Association of Counties (NACo) provided a thorough summary of the U.S.
Treasury ARPA Final Rules.
County ARPA Compliance and Triangle J Council of Governments Collaboration
Orange County has partnered with Triangle J Council of Governments to provide ARPA project coordination, reporting and
compliance with the U.S. Treasury Final Rules. In addition, the Finance Department has worked with the County
Attorney's Office and held webinars with all County departments to ensure all recommended projects submitted to the
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Board and County Manager meet all Federal guidelines. The next (third) ARPA project consideration from the County
Manager to the Board is scheduled to be a part of the FY 2022-23 Recommended Budget in May 2022.
General Fund Summary
FY 2022 FY 2021 FYs 2022 vs 2021
GENERAL FUND Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance'
Property Tax $177,661,825 $177,661,825 $146,141,390 82.26% $140,261,324 83.64% $5,880,066 -1.38%
Sales&Use Tax $26,702,047 $26,702,047 $7,981,192 29.89% $7,136,219 29.95% $844,973 -0.06%
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Licenses and Permits $274,550 $274,550 $65,602 23.89% $72,675 26.47% -$7,073 -2.58%46 1
C Charges for Services $12,478,132 $12,662,171 $6,267,249 49.50% $4,488,448 35.50% $1,778,801 14.00%J& 2
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w Intergovernmental $18,226,773 $20,792,680 $6,971,416 33.53% $10,174,823 42.02% -$3,203,407 -8.49%j& 3
cc Transfers In $74,504 $95,337 $20,833 21.85% $0 0.00% $20,833 21.85%& 4
Miscellaneous $3,376,346 $3,691,082 $443,480 12.01% $488,674 13.99% -$45,194 -1.97%6 5
Appropriated Fund Balance $1,968,184 $7,673,175 $0 0.00% $0 0.00% $0 0.00%
Total $240,762,361 $249,552,867 $167,891,162 67.28% $162,622,163 66.25% $5,268,999
Community Services $13,621,295 $14,216,710 $6,350,739 44.67% $6,806,321 45.45% -$455,582 -0.78%
General Government $10,277,361 $10,380,822 $5,625,395 54.19% $5,285,998 48.14% $339,397 6.05% e
Public Safety $28,528,552 $28,827,819 $13,366,140 46.37% $14,145,155 50.01% -$779,015 -3.65%I 2
Human Services $40,547,146 $44,008,794 $18,693,542 42.48% $18,222,726 42.44% $470,816 0.04%
o. Education $93,834,876 $95,583,514 $45,515,959 47.62% $45,025,409 48.12% $490,550 -0.51%
w Support Services $12,881,850 $15,282,833 $8,089,462 52.93% $9,288,542 65.90% -$1,199,080 -12.97%Lip s
Debt Service $40,027,279 $40,208,373 $24,763,605 61.59% $18,440,583 55.19% $6,323,022 6.39% s
Transfers Out $1,044,002 $1,044,002 $0 0.00% $0 0.00% $0 0.00%
Total $240,762,361 $249,552,867 $122,404,842 49.05% $117,214,734 47.75%1 $5,190,108 1.30%
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
1-Finance is confirming with the State if this represents a Timing variance.
2-Positive variance attributed to Register of Deeds Excise Fees,EMS Charges and Medicaid revenue.
3-FY 2021 included$4 million in COVID State Grants.This variance is not a Performance variance.
4-Represents a transfer from the County Capital Fund.
5-Miscellaneous includes Donations and Leases.Finance Department is reviewing material variances with affected departments.
6-Increases due to timing of payments,increases in Worker's Comp,Bonds and Insurances,specifically in Cyber Insurance.
7-FY 2021 had higher Emergency Service contracted services related to COVID response.
8-FY 2021 had HR One-Time Permanent Salaries and IT Expenses for Equipment to support Hybrid Work
9-Debt Service reflects incrased Principal and Interest
General Fund revenues are 67.3% of budgeted revenues compared to 66.2% the prior fiscal year. The improved
percentage versus budget is due to the Charges for Services as COVID public health restrictions are lifted.
General Fund Revenues
• Property Tax collections are 82.6% of the total Property tax budget compared to 83.6%the prior fiscal
year; this represents a timing variance in collections. Real and personal taxes were due September 1 but
peak at the end of December tax collections due to the pending January assessment of penalties and
interest. Note: As of the date of this report, the Tax Administration Office billing and collection rate is
95.34% versus 95.43%for the prior fiscal year.
• The County 2021 tax base reflected a property revaluation and a revenue neutral rate of .7887 cents per
$100 of assessed value. The adopted budget then increased the revenue neutral rate by 3 cents to .8187
per$100 of assessed value to meet increased debt service requirements. The tax appeals from the
revaluation are consistent with historical levels at 1.5% of the total tax base. The County has also
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implemented a Long-Time Homeowners Assistance Program utilizing ARPA funds to assist low-income
residents negatively impacted by the revaluation.
• Motor vehicles are 49% of the Motor Vehicle budget as compared to 52.7% in the prior fiscal year. This
is a Timing Variance as there remains an additional of$828,759 in December collections not yet
reflected in this quarterly report. That would bring revenue performance consistent with the prior fiscal
year at $5.8 million.
• 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.
• Sales Tax for Articles 39, 40 and 42 are 29.9% which is similar to the prior fiscal year. The amounts listed
above includes collections for three months (July, August and September); there is a three-month
revenue lag from the NC Department of Revenue (NCDOR). This sales tax distribution reflects a
sustained economic recovery despite the Omicron variant. Sales tax revenues collected for FY 2021-22
are $7.9 million as compared to $7.1 million the prior fiscal year or 11.8% increase over the prior fiscal
year through the second quarter. The State-wide increase for the same period is 14%. The County lag
behind the State percentage is attributed to a large taxpayer refund of$2 million.
Article 39 sales tax is a one cent tax on every retail dollar and is collected based on where the retail item is
actually received ("point of delivery"). Example: When a shopper purchases a merchandise at a local mall,
this merchandise may cost $50, creating a collection of Article 39 sales tax of$0.50 which will go to the
county and/or municipality where the mall is located if the shopper leaves with the merchandise. If the
shopper were to buy the item in one county, and have it shipped to another county for delivery, then the
tax would be reflected in the receiving county's collections. This sales tax is Orange County's largest Article
sales tax and reflects the broadest retail sales trends within the County.
Article 40 sales tax is a half cent tax on every retail dollar ($0.25 for the same $50 merchandise mentioned
in Article 39) but differs from the Article 39 sales tax in that it is collected based on Statewide retail sales
and then distributed to counties and municipalities based on the percentage of the state population
residing within the county and/or municipality. This tax reflects the broadest retail trends across the entire
state and is less affected by retail sales growth in any one local government jurisdiction.
Article 42 sales tax is a half cent tax on every retail dollar, and is a point of delivery similar to Article 39 sales
tax.
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• Charges for services are 49.5% of the budget as compared to 35.5% lower the prior fiscal year. The FY
2021-22 significant increase over the prior fiscal year reflects the lifting of COVID public health
restrictions which curtailed revenues. Cost recovery revenue for Register of Deeds Excise Stamps is $1.3
million for the first six months of FY 2021-22. The prior year annual total for Excise Stamps was $1.4
million. This strong growth is indicative of the low interest rate environment which has facilitated real
estate activity. The Excise stamp rate tax is two dollars for every thousand dollars of real estate transfer.
The other cost recovery growth areas in this category are Emergency Services Ambulance charges and
Medicaid reimbursements.
• Miscellaneous revenue variance of 12% of budgeted revenues as compared to 13.9% the prior fiscal.
This category includes donations, lease rentals hold harmless and investment earnings. FY 2021-22 total
of$443,480 is slightly below the prior fiscal year but is not a point of concern as this represents a timing
variance for North Carolina Department of Revenue Hold Harmless revenue.
General Fund expenditures are 49% of budgeted expenditures as compared to 47.7%the prior fiscal year. The
variance is primarily attributed to the increasing debt service from $18.4 million the prior fiscal year to $24.7
million through the second quarter.
General Fund Expenditures
• General government represented 54.1% of total general government as compared to 48.1% the prior
fiscal year. This is a timing variance attributed to property casualty and workers compensation premium
being paid upfront payments as compared with the prior year installment payments. In addition there is
a performance variance attributed to increased Cybersecurity insurance in the amount of$158,100 in FY
2021-22 versus $39,530 in FY 2020-21.
• Support services represented 52.9% of total support service as compared to 65.9%the prior fiscal year.
The prior fiscal year reflects $1.3 million in Round 2 CARES funds paid out of a Non-Departmental to the
towns and One-Time expenses for Information Technology equipment to support the County's Hybrid
work model.
• 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.
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• Education appropriations are 47.6% of its budget as compared with 48.1%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, School Equity Training, Deferred Maintenance,
Durham Tech Current Expense and Recurring Capital.
• Second Quarter debt service represents 61.6% of total debt service as compared to 55.2%the prior
fiscal year. This is due to the recently issued bonds to support the Capital Program.
Summary of Other Funds
FY 2022 FY 2021 FYs 2022 vs 2021
OTHER FUNDS Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance'
29-Annual Grants Project Fund $153,943 $153,943 $27,924 18.14% $10,345 6.94% $17,579 11.20%0 10
30-Multi-Year Grant Projects Fund $552,076 $668,369 $501,362 75.01% $621,642 68.14% -$120,280 6.87%
32-Multi-Year Community Development Fund $948,056 $2,731,132 $1,006,509 36.85% $757,332 10.37% $249,177 26.48% 10
m 33-Housing Fund $4,501,584 $4,628,077 $2,552,331 55.15% $2,084,042 46.03% $468,289 9.12%
c 35-Emergency Telephone Fund $759,757 $759,757 $316,565 41.67% $314,780 41.67% $1,785 0.00%
'm 37-Visitor's Bureau Fund $1,432,667 $1,940,585 $954,387 49.18% $703,371 36.22% $251,016 12.96%0 10
38-Spay/Neuter Fund $71,350 $75,651 $12,017 15.88% $36,642 44.50% -$24,625 -28.61%
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50-Solid Waste Enterprise Fund $11,690,750 $12,545,384 $9,070,978 72.31% $8,977,009 74.23% $93,969 -1.93%
53-Sportsplex Fund $3,690,656 $3,766,562 $1,818,340 48.28% $1,055,795 27.81% $762,545 20.47%0
70-Employee Health&Dental Fund $12,336,336 $12,343,842 $5,354,272 43.38% $6,604,699 46.89% -$11250,427 -3.51% 10
29-Annual Grants Project Fund $153,943 $153,943 $53,722 34.90% $38,311 25.70% $15,411 9.20% 10
30-Multi-Year Grant Projects Fund $552,076 $668,369 $320,164 47.90% $351,885 38.57% -$31,721 9.33%
32-Multi-Year Community Development Fund $948,056 $2,731,132 $1,712,213 62.69% $4,570,792 62.61% -$2,858,579 0.09% io
33-Housing Fund $4,501,584 $4,628,077 $2,412,301 52.12% $2,159,326 47.69% $252,975 4.43%
a 35-Emergency Telephone Fund $759,757 $759,757 $225,518 29.68% $415,373 54.98% -$189,855 -25.30%
CL 37-Visitor's Bureau Fund $1,432,667 $1,940,585 $1,222,873 63.02% $1,198,282 61.71% $24,591 1.31% io
W 38-Spay/Neuter Fund $71,350 $75,651 $24,245 32.05% $21,953 26.66% $2,292 5.39% io
50-Solid Waste Enterprise Fund $11,690,750 $12,545,384 $5,611,208 44.73% $5,146,318 42.56% $464,890 2.17%
53-Sportsplex Fund $3,690,656 $3,766,562 $1,475,920 39.18% $1,684,674 38.72% -$208,754 0.46%
70-Employee Health&Dental Fund $12,336,336 $12,343,842 $5,933,475 48.07% $6,102,427 43.33% -$168,952 4.74%16 io
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
10-Finance monitoring these funds with management to achieve breakeven results.
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Solid Waste Fund
Solid Waste revenues are 72.3% of the total revenues as compared to 74.2%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 44.7% of total expenditures as compared to 42.5%
the prior fiscal year. This fund has exhibited financial resilience and was spared from the impacts other funds
experienced at the peak of the pandemic.
Sportsplex Fund
Sportsplex revenues are 48.2% of budget as compared to 27.8%the prior fiscal year due to the lifting of public
health restriction and positive impacts on user fees. Sportsplex expenditures are 39.2% of budget as compared
to 29.8%the prior fiscal year. FY 2021-22 revenues are $1,818,340 and expenditures are $1,475,920 through
the second quarter. FY 2020-21 revenues were $1,055,795 and expenditures are $1,130,847 through the
second quarter.
The Sportsplex Fund has shown improved operations through the first six months of this fiscal year. The
December 14 Budget Amendment #5-A which authorized the transfer of$790,000 in County revenues is
intended to replenish the funds working capital requirements impacted during the peak of the public health
restrictions. Ice rink, membership fees and aquatics revenues comprise the predominant revenue sources to
support the fund's expenditures. The Budget Amendment transfer amount is not yet reflected in the second
quarter revenues.
Visitors Bureau Fund
Visitors Bureau revenues are 49.2% of budget as compared to 36.2% the prior fiscal year due to the lifting of
public health restrictions and increased occupancy levels at hotels and lodging facilities throughout the County.
Visitors Bureau expenditures are 63% of budget as compared to 61.7% the prior fiscal year. FY 2021-22
revenues are $954,387 and expenditures are $1,222,873 through the Second Quarter. FY 2020-21 revenues
were $703,371 and expenditures are $1,198,282 for the Second Quarter. The FY 2021-22 comparison of
revenue versus expenditures for the first six months indicates that though there is certainly an improved
revenue base, staff will continue to monitor the fund's progress. As was the case with the Sportsplex Fund,
Finance recommended a transfer of$560,000 as a part of Budget Amendment #5-A to backstop the fund's
operations. The Budget Amendment transfer amount is not yet reflected in the second quarter revenues.
As noted on the Other Funds table, Finance is carefully monitoring the Housing Funds to ensure to
reimbursement of grant revenues are drawn down to cover the expenditures incurred to date. Similarly the
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Dental and Health Fund revenues versus expenditure are being monitored for any subsequent budget
amendments.
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
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
Travis Myren, Deputy County Manager
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