HomeMy WebLinkAboutAgenda 05-20-25; 12-2 - Information Item - Memorandum - Financial Report - Third Quarter FY 2024-25 1
ORANGE COUNTY
NORTH CAROLINA
FINANCE and ADMINISTRATIVE 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 20, 2025
Re: Financial Report-Third Quarter FY2024-25
This Third Quarter Financial Report focuses on County Intergovernmental revenues in view of the Federal
Administration position regarding grant funding to US State and Local governments. Staff has held ongoing
meetings with all departments that receive Federal and State funding throughout the third quarter. As of March
31, 2025, none of the County's budgeted grants have been identified for Federal cancellation (As of the
publication date of May 20, 2025, additional developments have emerged, including discussions regarding
potential adjustments to programs including Medicaid and Food and Nutrition Services (FNS). These discussions
are being closely monitored and will be reported as formal guidance is issued.) Through the end of the third
quarter General Fund revenues are 84% of the budget. This revenue metric is consistent with historical budget
versus actual percentages. Furthermore, spending is in line with 66% of budget with historical trends, with a
projection of breakeven General Fund financial results.
Staff began a more rigorous review of intergovernmental revenues at the start of the new Federal
administration to ascertain risk. The table on page 3 summarizes County programs that may be at risk. It is
important to note that there have been no formal Federal cancellation notifications. The North Carolina
Department of Health and Human Services (NCDHHS) did alert all NC counties of a delay in Federal fund draws.
Note: Previous delays have occurred but then funds were subsequently remitted several business days later.
This type of delay is likely attributed to Federal staffing levels.
The County's Community Development Fund is being monitored closely. All the affected County grant
departments and staff are alerting the Manager's Office and Finance. The other consideration pertains to
current and forecasted economic conditions based on recent U.S. tariff policy. The following economic data and
links provides insight from two leading North Carolina economists.
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Economic Data from NC State University and UNC-Charlotte:
The NC State University full April 2025 report can be accessed here NCSU Index April 2025
[Dr. Walden's April 2025 edition of the NCSU Index of North Carolina Leading Economic Indicators reports a 2.1%
decline in March, following a modest increase in February. This downturn was primarily due to a significant drop
in building permits and a continued decrease in the national leading index. However, there were positive signs,
such as a reduction in initial unemployment claims and slight increases in manufacturing hours and earnings. Dr.
Walden notes that ongoing tariff discussions are a key factor influencing the state's economic outlook, with
potential negotiations possibly shifting the sentiment from "concern" to "optimism." ]
The UNC-Charlotte University report can be accessed here Belk College Economic Forecast Q1 2025
[Dr. Connaughton's First Quarter 2025 North Carolina Economic Forecast was presented on March 4, 2025. He
projects a 2.53% increase in the state's real GDP for 2025, with all 15 economic sectors expected to grow. The
sectors with the strongest projected growth rates include agriculture (9.3%), information (5.9%), and retail trade
(4.0%). However, he also highlights uncertainties, such as the potential return of inflation and the impact of
recent fiscal policies. Dr. Connaughton estimates a 60% chance of inflation returning and a 30% chance of a
recession in 2025.]
General Fund
General Fund revenues are 84.7% of budgeted revenues are the same percentage rate the prior fiscal year. This
is further indication that the risk pertaining to the Intergovernmental revenue category has not been a
detriment to the County's revenue base through March 31, 2025. Property taxes and interest income have been
strong and provides an offset to slower sales tax growth. Sales Tax Medicaid Hold Harmless will have a major
adjustment in mid-August and that revenue stream is expected to meet the budget unlike Article 39, 40 and 42
due to higher than anticipated sales tax refunds from the North Carolina Department of Revenue.
• 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. Property tax revenues have met the budget projections for the fiscal year. The
Tax Administration Office billing and collection rate will meet the 99.2% budgeted amount. Real and
Personal tax revenues are $198.3 million. The remaining property taxes represent the last three
months of motor vehicle tax revenues to meet the overall property tax budgeted amount of$201.9
million. The State remits motor vehicle tax revenues to the county monthly. Motor Vehicle billing
versus collection are at 71.2%throughout the third quarter representing the monthly timing variance
of the remaining revenue from the State.
Tariffs Impact on Motor Vehicles
This revenue stream has remained stable to date. The imposition of a tariff on imported vehicles and
parts is expected to have a measurable impact on vehicle pricing and consumer purchasing behavior.
Preliminary reports from automotive dealers across the state indicate an uptick in pre-tariff vehicle
purchases, followed by growing consumer hesitation in response to rising vehicle prices. This revenue
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stream will continue to be closely monitored for fiscal impacts. Unlike sales tax which has a three-month
lag, motor vehicle (revenue to economic activity) is one month allowing for assessing impacts to be
timely monitored.
• Sales tax revenues are 64.2% of the budget compared to 62.5% the prior fiscal year. The Hold Harmless
sales tax revenues was budgeted at $4.5 million in FY 2024-25. This represented a budgeted decline of
$1.2 million from the prior year's budget. As noted in the prior year's third quarter report, increased
State Medicaid expenditures in turn eroded the County revenue share. The FY 2024 Hold Harmless
amount was $4.8 million. The FY 2024-25 budgeted amount of$4.8 million should be met as it
accounted for the increased State Medicaid expense increases. The North Carolina Department of
Revenue will make final adjustments to the Hold Harmless in mid-August. Another sales tax risk factor
is refunds to taxpayers that erroneously paid sales tax. Articles 39, 40 and 42 are projected declines
also due to higher than anticipated sales tax refunds. Nonprofits and overpayments are the two
primary factors. The three-month lag in sales tax collection is a key factor in monitoring economic
correlation; the County will receive its June sales activity on or by September 20, 2025, and this
generally is the last transaction posted to the County's books for FY 2024-25.
• Intergovernmental revenues are 53.7% of budgeted revenues as compared to 55.5%the prior fiscal
year. As noted on the first page, none of these revenues have received any Federal or State
cancellation notice. The percentage received to date has historically trailed the budget through the
third quarter as noted in the table below:
Table 1: Federal and State Grants Trend
Fiscal Year Intergovernmental Revenue
Third Quarter
2024-25 53.7%
2023-24 55.5%
2022-23 50.3%
2021-22 53.2%
2020-21 59.7%
2019-20 50.6%
The intergovernmental revenue trend above is attributed to the historical timing lag for claim
reimbursements. With the outset of the new Federal Administration, County departments began
submitting reimbursements as soon as practical under their Federal and State program guidelines.
Through the third quarter of FY 2024-25 $15 million of Federal grant spending has occurred which
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represents a Budget versus Actual metric of 68%, considerably higher than Table 1 above which includes
State grants. The higher Federal reimbursement rate is attributed to increased County diligence in drawing
down Federal funds.
In terms of FY 2024-25 revenue recognition, the Governmental Auditing Standards Board allows for a two-
month revenue recognition period for intergovernmental revenues; therefore, Finance can record
intergovernmental revenue up through August 31, 2025. A key communication to all County departments
has been to apply and submit remaining draw requests as soon as allowed and practical.
Table 2 below represents the programs being monitored based on our third quarter meetings. These
programs represents $3.2 million remaining to be reimbursed. The expectation is that these funds will be
received but their listed here for tracking purposes.
Table 2: Programs Being Monitored by County Staff
Yellow-Potential Risk
Child Support Enforcement and Social Services Notices of delay by several business days
Emergency Solutions Grant Potential grant funding cuts within HUD
Cooperative Fair Housing Assistance Program Potential grant funding cuts within HUD
Continuum of Care Housing: Planning Potential grant funding cuts within HUD
Continuum of Care Housing: Planning Potential grant funding cuts within HUD
Continuum of Care Housing Program Potential grant funding cuts within HUD
Continuum of Care Housing Program: Rapid Rehousing Potential grant funding cuts within HUD
Continuum of Care Housing Program Potential grant funding cuts within HUD
Disaster Grant-Public Assistance(COVID 19) Awaiting FEMA processing
Police and Mental Health Collaborations for Diversion Program(1) Stop work order in effective March 2025
1)Program funds expire September 30,2025 but County funded in FY 2025-26
• Investment Earnings are $1.6 million through the third quarter compared to the budget of$1.8 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,
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 4.23%through March 31.
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March 31, 2025
■Overnight Repo
■Term Repo
■Fixed Rate Agencies
Floating Rate Agencies
Fixed Rate Treasuries
■Floating Rate Treasuries
General Fund expenditures are 66% of budget, as compared to 62%the prior fiscal year. This spend rate trend is
consistent with historical spend rate, and any variances can be attributed to timing and not performance
variance.
• Human Services third quarter expenditures represented $35.1 million or 68% of the functional budget
as compared to $34.1 million or 69%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 $29.1 million or 70% of the functional budget as compared to
$27.4 million or 75% the prior fiscal year. Sheriff's Office and Emergency Services personnel levels are
the primary drivers.
• Support Services expenditures represented 85.3% of the functional budget as compared to 76.4%the
prior fiscal year. The variance in this function is attributed to the City-wide Telephone cost center now
paid form this cost center and increased workers compensation claims.
• Education expenditures represented 81.6% of its budget as compared with 72A the prior fiscal year.
School appropriations are generally paid to both School districts by the 15t" of each month. However,
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the County advanced current expense to the Chapel Hill-Carrboro City Schools this fiscal year. The
Education budget includes School Health and Safety Contracts, Deferred Maintenance, Durham Tech
Current Expense and Recurring Capital. This function will complete the fiscal year with the budgeted
authorization levels.
Other Funds
Sportsplex Fund
Sportsplex Fund Sportsplex revenues are at $4.4 million or 85.7% of budget as compared to $4.2 million or
88.2%the prior fiscal year. The Sportsplex program revenues have continued to show increases across most
categories. Ice Rink revenues are $1.6 million or 36% of revenues like the prior fiscal year. Wellness and
Membership revenues are $1.3 million or 29% of budget compared to $1 million or 26% the prior fiscal year.
Kidsplex revenues are $557,696 or 12.4% revenues compared to $510,663 or 12.1% of revenues the prior fiscal
year. Aquatics revenues are $505,997 or 11.3% compared to $492,212 or 11.6% of revenues compared to the
prior fiscal year. Fieldhouse (Turf and Court) revenues are $209,930 or 4.7% of budget compared to $223,495 or
5.3%the prior fiscal year. The Sportsplex expenses are $3.2 million 63.16 of budget compared to $2.9 million of
61.9%the prior fiscal year. Debt service, which totals $462,423, is sufficiently covered by Sportsplex revenues.
Solid Waste Fund
Solid Waste Fund Solid Waste revenues are $10.8 million or 77.1% of the budget as compared to $10.9 million
or 82% of the budget in the prior fiscal year. The solid waste program fee of$138 is billed as a line item on the
Property Tax bill. Peak fee collections occur by the end of December. Solid waste expenditures are $7.7 million
or 65.1% of expenditures as compared to $7.2 million or 54.3%the prior fiscal year. Consistent with well
performing enterprise funds, the fund remains self-supporting this fiscal year. Debt service which totals
$972,878 will be sufficiently covered by Solid Waste revenues.
Visitors Bureau Fund
Visitors Bureau revenues are $2.3 million or 62.4% of the budget as compared to $1.8 million or 61.6% of the
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 $2.2 million or 68% as compared to $2.1 million or
69.6% the prior fiscal year.
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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
cc: Travis Myren, County Manager
Cait Fenhagen, Deputy Manager
Department Directors
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APPENDIX
FY 2025 FY 2024 FYS 2025 vs 2024
GENERAL FUND Original Budget Revised Budget YTD Actual Percentage YTD Actual Percentage YTD %Variance
Property Tax $201,999,345 $201,999,345 $198,389,673 98.21% $188,300,309 98.71% $10,089,364 -0.50%
Sales&Use Tax $44,139,012 $44,139,012 $28,353,019 64.24% $27,347,830 62.52% $1,005,189 1.72%
Licenses and Permits $274,200 $274,200 $106,115 38.70% $110,727 40.38% ($4,612) -1.68%
Charges for Services $15,103,690 $15,126,609 $10,048,537 66.43% $9,110,438 64.12% $938,099 2.31%
Intergovernmental $22,017,818 $22,799,698 $12,262,299 53.78% $11,742,800 56.18% $519,499 -2.40%
Investment Earnings $1,800,000 $1,800,000 $1,610,395 89.47% $1,552,072 97.00% $58,323 -7.53%
Transfers In $1,006,039 $1,149,818 $0 0.00% $0 0.00% $0 0.00%
Miscellaneous $596,371 $1,010,747 $682,290 67.50% $851,203 92.78% ($168,913) -25.28%
Appropriated Fund Balance $7,100,000 $9,341,528 $0 0.00% $0 0.00% $0 0.00%
Total $294,036,475 $297,640,957 $251,452,328 84.48% $239,015,379 84.73% $12,436,949 -0.25%
Community Services $16,096,949 $17,091,389 $11,452,550 67.01% $11,231,337 71.21% $221,213 -4.20%
General Government $12,699,830 $13,224,472 $9,672,505 73.14% $9,096,666 74.05% $575,839 -0.91%
Public Safety $40,930,579 $41,408,727 $29,137,743 70.37% $27,494,119 75.79% $1,643,624 -5.42%
Human Services $53,023,027 $53,724,245 $35,168,766 65.46% $34,148,490 69.00% $1,020,276 -3.54%
Education $113,115,311 $113,159,588 $92,338,483 81.60% $78,530,850 72.73% $13,807,633 8.87%
Support Services $18,787,800 $19,212,546 $15,476,983 80.56% $14,299,382 76.40% $1,177,601 4.16%
Debt Service $0 $0 $0 0.00% $0 0.00% $0 0.00%
Transfers Out $39,756,619 $39,853,514 $0 0.00% $0 0.00% $0 0.00%
Total $294,410,115 $297,674,481 $193,247,030 64.92% $174,800,844 61.97% $18,446,186 2.95%
FY 2025 FY 2024 FYs 2025 vs 2024
OTHER FUNDS Original Budget Revised Budget YTDActual" Percentage AMT D YTD Actual* Percentage YTD %Variance*
ctu11-Debt Service Fund $34,322,203 $34,322,203 $813,444 2.37% $0 0.00% $813,444 2.37%
32-Community Development Fund $6,266,453 $8,024,268 $566,670 7.06% $1,713,922 19.05% ($1,147,252) -11.99%
33-Housing Voucher Fund $7,542,500 $7,618,131 $5,775,139 75.81% $5,214,949 73.61% $560,190 2.20%
3 35-Emergency Telephone Fund $428,404 $1,755,633 $298,879 17.02% $394,090 55.38% ($95,211) -38.36%
37-Visitors Bureau Fund $3,058,321 $3,749,884 $2,343,383 62.49% $3,060,730 61.65% ($717,347) 0.84%
ate' 44-Inspections Fund $1,766,217 $1,766,217 $885,955 50.16% $857,836 53.30% $28,119 -3.14%
50-Solid Waste Enterprise Fund $12,967,288 $14,059,838 $10,845,526 77.14% $10,989,433 82.02% ($143,907) -4.88%
53-Sportsplex Fund $5,214,172 $5,235,843 $4,488,377 85.72% $4,210,723 88.23% $277,654 -2.51%
70-Employee Health&Dental Fund $18,045,547 $18,045,547 $10,341,832 57.31% $9,674,111 59.53% $667,721 -2.22%
11-Debt Service Fund $34,322,203 $34,322,203 $33,461,335 97.49% $34,416,233 91.11% ($954,898) 6.38%
32-Community Development Fund $7,227,455 $8,985,270 $1,508,184 16.79% $1,515,128 17.74% ($6,944) -0.95%
33-Housing Voucher Fund $7,542,500 $7,618,131 $7,058,999 92.66% $5,136,342 72.50% $1,922,657 20.16%
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35-Emergency Telephone Fund $428,404 $1,755,633 $526,358 29.98% $520,933 73.05% $5,425 -43.07%
37-Visitors Bureau Fund $3,058,121 $3,749,884 $2,221,101 59.23% $2,131,802 69.65% $89,299 -10.42%
y 44-Inspections Fund $1,766,217 $1,766,217 $1,201,656 68.04% $1,065,389 66.19% $136,267 1.85%
W50-Solid Waste Enterprise Fund $12,967,288 $14,059,838 $7,775,511 55.30% $7,279,002 54.33% $496,509 0.97%
53-Sportsplex Fund $5,214,172 $5,214,172 $3,285,099 63.00% $2,958,211 61.98% $326,888 1.02%
70-Employee Health&Dental Fund $18,045,547 $18,045,547 $13,657,602 75.68% 1 $9,049,689 55.65%1 $4,607,913 20.03%
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