HomeMy WebLinkAboutAgenda 05-21-24; 12-2 - Information Item - Memorandum - Financial Report - Third Quarter FY 2023-24 and American Rescue Plan Act Update 1
ORANGE COUNTY
NORTH C.AROLINA
FINANCE andADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181,Hillsborough,NC 27278 1 919.245.2453
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: May 21, 2024
Re: Financial Report -Third Quarter FY 2023-24 and American Rescue Plan Act Update
This Third Quarter Financial Report provide s Budget versus Actuals comparisons, American Rescue Plan Act
(ARPA) life-to-date expenditures by project below and a UNC-Charlotte Economic Update. All ARPA expenditures
have been obligated ahead of the December 31, 2024, obligation deadline date,and all funds will be expended by
December 31, 2026.
Appendices 1 and 2 tables include the General Fund and Other Funds Budget versus Actual performance. County
operating funds are projected to end in breakeven positions despite a mid-March State revenue update
regarding Medicaid Hold Harmless Sales Tax and Articles 39, 40 and 42 detailed on pages 2-3.
American Rescue Plan Act- Life-To-Date Expenditures
Project Revised Budget Total E6cpenditures %af Budget
ID Project Name [Life to Date} [Life to Date} used Project States
96110 Durham Tech Cam m u n ity Cal lege for Sm a ll Business Center $ 70,000.00 $ 0% Awaiting reim bu—nt su pport
96111 First Responder Behavioral Health Program $ 45,000.00 $- 0% Canceling-funds to be m oved to Housi ng
96115 Reven ue Repl a cement:Emergen cy Housing Assista n ce(EHA) $ 9,257,528.00 $ 8,998,029.62 97% Completed..,than 50
96117 Housing Locator $ 65,705.00 $ 40,547.56 62% Completed Iessthan 50
96120 Government Alliance on Racial Equity Youth Program $ 45,540.00 $ 21,950.51 47% Completed Iessthan 50
96122 1 Broadband Design and Implementation $ 10,000,000.00 $ 4,000,000.00 40% Completed Iessthan 50
96102 senior Lunch Program $ 119,22400 $ 45,11796 39% Completed lessthan 50
96121 Language Access Services $ 15,000.00 $ 4,GO5.57 31% Completed 1—than 50
96133 Emergency Housing Assistance $ 3,714,882.00 $ 3,639,980.04 98% Completed 50 or more
96115 Housing Helpline Coordinated Entry Specialist $ 237,292.00 $ 212,962.01 90% Closing
96127 Stabilization Program for Former Foster Youth $ 10,000.00 $ 8,749.19 87% Completed 50 or more
95119 Eviction Diversion $ 157,04500 $ 133,300.88 80% Closing
96112 Powered Air Purifying Respirators(PAPR3) $ 124,000.00 $ 96,192.00 78% Completed 50 or more
96113 ARPA Coordinator $ 133,772.00 $ 73,625.00 55% Completed 50 or more
96123 Long Time Homeowner Assistance Program $ 515,364.00 $ 260,571.26 50% Completed 50 or more
96131 Fire district radios $ 2,562,300.00 $ 1,069,621.75 42% Completed 50 or more
96124 Long Time Homeowner Assistance Program Soft— $ 8,90500 $ 10,41400 100% Completed
96125 Youth Enhancement Fund $ 25,000.00 $ 25,349.21 lOd% Completed
96125 Countywide Food Distribution and Storage $ 105,550.00 $ 106,609.46 IO0% Completed
96104 Point loni-tion $ 68,800.00 $ 68,800.00 lOD% Completed
96114 Affordable Housing&Home Repairs $ 120,000.00 $ 120,000.00 109% Completed
96115 Landlord Incentive Program $ 75,000.00 $ 75,000.OD 100% Completed
96130 Ch i I c a re Su pport Pa rent Fees $ 540,000.00 $ 539,977.10 100% Completed
96105 ARPA Gra nt Compli a n ce Position $ 38,751.00 $ 38,624.95 300% Completed
96125 Su pport for Low l ncome Fa mi l ies $ 25,000.00 $ 24,333.23 97% Completed
96103 Replacement Temporary Facility Modifications $ 51,136.00 $ 48,747.29 95% Completed
96105 Revenue Replacement:Street Outreach,Harm Reduction,and Deflection(SOHRAD) $ 279,922.00 $ 317,705.23 300% Closing
96107 Revenue Repl acement:Resta rt the Arts G ra nts $ 100,000.00 $ SO0,000.00 100% Complete
96104 Revenue Repl acement Tourism and Hospitality Recovery $ 30D,00000 $ 299,28560 100% Complete
96108 1 Revenue Replacement:Arts Commission Aid tolmpacted Industries $ 16,000.00 $ 15,7137.06 99% Complete
Total: $ 29,939,722.00 S 20,385,884.53 76%
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General Fund
General Fund revenues are 84.7%of budgeted revenues as compared to 86.8%the prior fiscal year. The variance
is attributed to a timing variance in U.S. Marshals Service detention center reimbursements and a performance
variance in Ambulance charges further described below.
• Property Tax collections include Real, Personal and Motor Vehicles. Real and personal taxes collections
peaked at the end of December prior to the January assessment of penalties and interest and has met
the budgeted revenues. Propertytax revenues are 98.7%of the budget compared to 97.5%the priorfiscal year.
The Tax Administration Office billing and collection rate will meet the 99.2%budgeted amount. Real and Personal tax
revenues are$177.1 million and have metthe budget.The remaining property taxes represent the last three
months of motor vehicle tax revenues. The State remits motor vehicle tax revenues to the county
monthly. Motor Vehicle billing versus collection are at 80%through the third quarter representing the
monthly timing variance of these remaining revenue from the State.
• Sales tax revenues are 62.5%of the budget compared to 74.9%the prior fiscal year.The Hold Harmless sales
tax revenues which was budgeted at$5.7 million in FY 2023-24 are projected to be negatively impacted by up
to$2 million due to increased State Medicaid expenditures as described below.As a response, Finance is
working with the NC Department of Revenue to expeditiously process$1.5 million in sales tax reimbursements
resulting from County sales tax previously paid to the State primarily for capital projects.
Medicaid Hold Harmless Sales Tax Revenue
The General Assembly enacted the Medicaid 2007 and 2008 Funding Reform Legislation (House Bill 1473) which
phased (swapped) out NC counties share of Medicaid expenditures in exchange, NC counties
ceded Article 44 Sales Tax to the State beginning October 1, 2009. In exchange for the State assuming the
counties' share of Medicaid costs, NC counties and municipalities are to be held harmless for their loss in Article
44 sales tax revenue, through supplemental sales tax revenues also known as Hold Harmless Sales Tax revenues.
North Carolina counties were notified mid-March 2024 that Hold Harmless Sales Tax would be decreasing for
both fiscal years 2023-24 and 2024-25. The projected decrease in this revenue source is attributed to an
increase in State Medicaid expenses. The increase in Medicaid expenses thus erodes the Hold Harmless Sales Tax
revenues received by NC local governments (See Appendix 3). The North Carolina Association of County
Commissioners Research Office and the Department of Health and Human Services attributes these Medicaid
increases to:
1) 2023 State Appropriations Act (State Budget) which increased state Medicaid spending by providing
over $600 million to increase Medicaid provider rates, including rates for skilled nursing, personal care,
and behavioral health. These provider rate increases singularly added over $90 million to the historical
county 15% share, which results in a decrease in County Hold Harmless payments.
2) 2022 State Appropriations Act (State Budget) increased state Medicaid by $231.8 million to continue
higher COVID reimbursement rates for a continuation of coverage for nursing homes, personal care
services and prescription drug costs.
3) Increase in the State share of the Federal Match rate.
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The General Fund Articles 39, 40 and 42 experienced strong growth between fiscal years 2021-2023. As indicated
in the table below, that growth rate has slowed considerably this fiscal year. The strong three year-average
growth was attributed to the pandemic induced increase in electronic commerce/online purchases and the
State's ability to capture those online sales. In addition, the higher inflationary rates during this same period
resulted in the double-digit growth. Articles 39 and 42 are the Articles that correlate and reflect the underlying
economy because they are point of sale. Article 40 is subject to a State-wide allocation which accounts for the
percent growth difference from Articles 39 and 42.
Articles FY 2023-2021 Three FY 2024 Year-To-Date Distribution Methodology
Year Average
Article 39 15.4% 7.2% Point of Sale
Article 40 12.77% .2% State-wide Per Capita
Article 42 15.31% 7% Point of Sale
Articles 39 and 42 growths should offset the Hold Harmless revenue decline.
• Charges for services are 64.1% of the budget as compared to 69%the prior fiscal year. The key revenue
sources responsible for this variance are Emergency Medical Charges and U.S. Marshals Service Bed
Utilization Reimbursements.
- Emergency Medical Charges (Ambulance Billings). Emergency Medical Charges collections are $2.9
million or 56% of budget as compared to $4 million or 107% the prior fiscal year. The decline reflects
arrearage in back billings. Both EMS and Tax Administration Office staff are making concerted efforts
to become current on the billings. This revenue source will be challenged to maintain the same
collection performance as the prior fiscal year.
- U.S. Marshals Service bed utilization rates are $296,635 or 24.7% of the budget compared to prior
$594,184 or 49.5% in the prior fiscal year. Staff is in communication with Detention Center staff to
ensure all remittances are received and timely recorded to the County general ledger before the
fiscal year ends.
- Excise Stamps (Real Estate Transfers). Excise Stamps are $979,562 or 76.2% of the budget compared
to $1 million or 57.8% of the budget in the prior fiscal year and is on track to meet the budget. Real
estate transfers are recorded monthly and reflect the number of real estate transactions and sales
activity.
• Investment Earnings are $1.5 million through the third quarter compared to the budget of$1.6 million.
This budget will be met by the fiscal year end. The County's investment policy emphasizes safety,
liquidity, and yield, in that priority order. The investment portfolio consists primarily of U.S. Treasuries,
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Federal Agencies, and Overnight Repurchase Agreements, which are all highly rated securities and
comply with the North Carolina Permitted Investments statutes. The portfolio composition indicated
below is currently yielding 5.21%through March 31, but this rate may likely decrease further contingent
on additional Federal Reserve cuts in the discount rate occur.
March 31, 2024
r
■Overnight Repo
■Term Repo
■Fixed Rate Agencies
Floating Rate Agencies
Fixed Rate Treasuries
■Floating Rate Treasuries
■Net Other Assets"
General Fund expenditures are 62%of budget, as compared to 67.8%the prior fiscal year, but this is due to debt
service expenses now being accounted for in the Debt Service Fund; the FY 2023-24 spend rate is 73% if debt
service expenses are included.
• Human Services third quarter expenditures represented $34.1 million or69%of thefunctional budgetas
compared to $28 million or 60%the prior fiscal year. Personnel expenses for Social Services, Medicaid
administrative support, Health and Housing Community Development are the primary drivers.
• Public Safety expenditures represented $27.4 million or75.5%of thefunctional budgetas compared to
$24.4 million or69%the prior fiscal year. Sheriff's Office and Emergency Services personnel levels are
the primary drivers.
• Support Services expenditures represented 76.4%of thefunctional budgetas compared to 111.5%the
prior fiscal year. The prior year's variance was a temporary over appropriation. The Support Services
function ended FY 2022-23 within its authorized budget after the allocation from non-departmental
accounts to County departments.
• Education expenditures represented 72.7%of its budget as compared with 72.6%the prior fiscal
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year. School appropriations are paid to both School districts by the 151" of each month. The
Education budget includes School Health and Safety Contracts, Deferred Maintenance, Durham Tech
Current Expense and Recurring Capital.
• Third Quarter debt service variance represents a timing variance pertaining to when principal and
interest disbursements were posted on the general ledger this fiscal year compared to the prior fiscal
year. The County has remaining April 1, May 1, and June 1 debt service payments for the remainder
of the fiscal year.
Other Funds
Sportsplex Fund
Sportsplex Fund Sportsplex revenues are at $4.2 million or 88.2% of budget as compared to $3.6 million or 87.6%
the prior fiscal year. The Sportsplex program revenues have grown across most categories. Ice Rink revenues are
$1.6 million or 39% of revenues compared to $1.3 million the prior fiscal year. Wellness and Membership
revenues are $1 million or 26% of revenues compared to $876,322 the prior fiscal year. Kidsplex revenues are
$510,663 or 12.1% revenues compared to $426,620 the prior fiscal year. Aquatics revenues are $492,212 or
11.6% of revenues compared to $488,967 the prior fiscal year. Fieldhouse (Turf and Court) revenues are
$223,495 or 5.3% of revenues compared to $264,931. The Sportsplex expenses are $2.9 million or 61.9% of the
budget. Debt service, which totals $465,257, are sufficiently covered by Sportsplex revenues.
Solid Waste Fund
Solid Waste Fund Solid Waste revenues are $10.9 million or 82% of the budget as compared to $10.7 million or
88.1% of the budget in the prior fiscal year. The solid waste program fee of$142 is billed as a line item on the
Property Tax bill. Peak fee collections occur by the end of December. Solid waste expenditures are $7.2 million or
54.3% of expenditures as compared to $7.2 million also or 56%the prior fiscal year. Consistent with well
performing enterprise funds, the fund remains self-supporting this fiscal year. Debt service which totals
$1,128,873 are sufficiently covered by Solid Waste revenues.
Visitors Bureau Fund
Visitors Bureau revenues are$1.8 million or 61.6%ofthe budget as compared to$1.6 million or 64.9%ofthe budget.The
growth is attributed to the continued increase in hotel lodging activity and the subsequent revenue from the 3%
occupancy tax.Visitors Bureau expenditures are$2.1 million or 69.6%as compared to$1.6 million or63.5%the prior
fiscal year. Advertising is the largest expenditure at $1.1 million or 36.5% of the budget. The FY 2024 budget
included a Visitors Bureau fund balance appropriation of$601,333; the FY 2023 ending fund balance was
$1,087,041.
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Functional Leadership Teams by Department
Community Services -Animal Services, NC Cooperative Extension, DEAPR, Economic Development, Orange
County Transportation Services, 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 Services, Housing, Equity, and Inclusion, , Library, Public
Health, and Social Services
Support Services-Asset Management Services, Community Relations, Finance &Administrative Services, Human
Resources, and Information Technologies
Acknowledgments to NCACC Research , Finance and Budget Offices.
cc: Bonnie Hammersley, County Manager
Travis Myren, Deputy County Manager
Department Directors
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APPENDIX 1: General Fund Summary
FY 2024 FY 2023 FYs 2024 vs 2023
GENERALFUND
Original Budget Revised Budget VTDActual* Percentage VTDActual* Percentage r'a %Variance{
Property Tax $190,759,520 $190,759,520 $188,300,309 98.71% $181,634,448 97.57% $6,665,861 1.14%1
Sales&Use Tax $43,739,131 $43,739,131 $27,347,830 62.52% $26,708,538 74.99% $639,292 -12.47%2
Licenses and Permits 5274,200 5274.200 5110.727 40.38% $120.139 43,81% -59.412 -3.43%
Charges for Services $14,208,193 $14,208,193 $9,110,438 64.12% $9,841,260 69.18% -$730,822 -5.06%3
Intergovernmental 519.686,908 520,900,437 511,742,800 56.18% 510332.018 50.38% 51,410.782 5.80%
Investment Earnings $1,600,000 $1,600,000 $1,552,072 97.00% $909,022 60.00% $643,050 37%4
Transfers In 51.391,290 51,500,732 SO 0.00% SO 0.00% SO 0,00%
> Miscellaneous 5846.286 5917.445 5851.203 92.78% 8803.325 73.00% 547.878 19.78%
Appropriated Fund Balance 0.00Q.Q00 S8,188,897 so v
aSo 0.0a o
TotalS279,505,528S282,088,555S239,015,379 84.73 230,348,750 86.85S8,666,629 .2.12
Community Services $15,241,917 $15,771,577 $11,231,337 71.21% $10,614,241 66.40% $617,096 -1.06%
General Government 511.987.685 512.283.771 59.096.666 74.05% 510.019.526 75.77% -5922.860 -3.63%5
Public Safetv $35,882,898 $36,276,912 527,494.119 75.79% S24,466.237 73.50% S3,027.882 4.48%6
Human Services 548.541,143 549,490,185 534,148,490 69.00% 528,053.348 60.70% 56,095.142 6.50%7
Education S107.805.947 8107.970.074 578.530.850 72.73% S71.541.451 72.60% S6.989.399 0.13%
Support Services $18,492,107 $18,716,624 $14,299,382 76,40% $11,214,453 111.50% $3,084,929 38.04%
a Debt Service SO 5691,500 $0 0.00% 530,003,418 78.80% -530,003,418 0.00
w a 1 S11096 0,00% o
Total S279,505,528 S282,088,555 $174,800,844 61.97% 9185,923,760 67.80% - 11122 916 -6.78%
Notes:
*-Actuals amounts include Encumbrances.
1-Property tax category includes Motor Vehicle which has three remaining months of collections.
2-Sales Tax reflects Refunds and Medicaid Hold Harmless.
3-Charges for Services reflects lower Ambulance Fees and US Marshal Bed Reimbursements.
4-Investment Earnings reflects a peak in Portfolio Yield of
5.2%.
5-General Government reflects
6-Public Safety increase reflects additional Personnel and Non-Personnel for Emergency Services and Sheriff's
Office.
7-Human Services reflects Social Services Personnel for Medicaid expansion and Economic Support.
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APPENDIX 2: Other Funds Summary
FY 2024 FY 2023 FYs 2024 vs 2023
OTHER FUNDS - %Variance'
Original Budget Revised Budget YiDActual* Percentage YiDActual* Percentage
11-Debt Service Fund $37,457,498 $37,774,928 $0 0.00% $6,000,000 0.00% -$6,000,000 0.00%B
33-Housing Fund $6,858,632 $7,084,886 $5,214,949 73.61% $4,322,820 87.01%
35-Emergency Telephone Fund $571,016 $713,091 $394,090 55.38% $197,432 25.46% $196,658 29.92%9
37-Visitor's Bureau Fund $2,716,666 $3,060,730 $1,887,028 61.65% $1,674,259 64.97% $212,769 -3.32%10
44-Inspections Fund $1,609,483 $1,609,483 $857,836 53.30% $0 0.00% 11
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50-Solid Waste Enterprise Fund $12,693,308 $13,398,098 $10,989,433 82.02% $10,746,310 88.10% $243,123 -6.08%
'= 53-Sportsplex Fund $4,696,687 $4,772,593 $4,210,723 88.23% $3,689,487 87.62% $521,236 0.61%
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70-Employee Health&Dental Fund $16,251,634 $16,251,634 $9,674,111 59.53% $8,669,332 56.31% $1,004,779.00 3.22%
11-Debt Service Fund $37,457,498 $37,774,928 $34,416,233 91.11% $0 0.00% $34,416,233 91.11%
33-Housing Fund $6,858,632 $7,084,886 $5,136,342 72.50% $4,283,050 86.21% $853,292 -13.71%
35-Emergency Telephone Fund $571,016 $713,091 $520,933 73.05% $257,736 33.24% $263,197 39.81%9
37-Visitor's Bureau Fund $2,716,666 $3,060,730 $2,131,802 69.65% $1,636,424 63.50% $495,378 6.15%10
44-Inspections Fund $1,609,483 $1,609,483 $1,065,389 66.19% $0 0.00% $1,065,389 11
50-Solid Waste Enterprise Fund $12,693,308 $13,398,098 $7,279,002 54.33% $7,284,537 56.67% -$5,535 -2.34%
53-Sportsplex Fund $4,696,687 $4,772,593 $2,958,211 61.98% $2,211,886 52.00% $746,325 9.98%
70-Employee Health&Dental Fund $16,251,634 $16,251,634 $9,049,689 55.65% $5,853,707 38.02% $3,195,982 17.63%
Notes:
*-Actual amounts incl ude Encumbrances.
8-Transfers from the General Fund wiII now be made atyear-end.Cash Pool account paid debt service.
9-E 911 fund balance decrease is anticipated because prior year fund balance exceeded the 20%allowable carryforward(fund balance).
10-FY 2024 Visitors Bureau Fund income includes$601,333 of appropriated fund balance.FY 2023 ending fund balance is$1,087,041.
11-Inspections Fund includes a budgeted transfer of$204,170 from the General Fund.
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APPENDIX 3: Foregone Article 44 and Medicaid Expenses
Orange County's Foregone Article 44 sales tax revenue has always exceeded its historical
share of Medicaid Expenses, which triggers an Annual Hold Harmless Payment.
$25,000,000
$20,000,000
Article 44 Sales Tax $ that Orange County would have received.
$15,000,000
$10,000,000
$5,000,000
$0
FY10 FY12 FY14 FY16 FY18 FY20 FY22 FY24
Sourced to NCACC Research using data from the NC Departments of Revenue and Health and Human Services.
Foregone Article 44
Minus Medicaid Expenses=
Hold Harmless Payment to (County and Towns)
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