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Audit shows fund balance reduction


By Ginger Livingston
The Daily Reflector

Tuesday, January 2, 2018

Discussions about fund balance are on the agenda for a Pitt County Board of Commissioners meeting later this month after the county’s annual audit revealed a larger than expected drop in the fund.

The audit, formally called the Comprehensive Annual Financial Report, reviewed the county’s finances for fiscal year 2016-17 which ended June 30.

The county’s available fund balance at that time was recorded at 18.06 percent of the general fund, nearly 1.5 percent less than the 19.61 percent that had been predicted, Pitt County Manager Scott Elliott said.

The audit was reviewed during the Board of Commissioners’ Dec. 18 meeting. Elliott said he was planning an additional discussion when the board meets on Jan. 22 for its annual capital budgeting workshop.

“There were a number of major things going on when we adopted the fiscal year 2016-17 budget,” Elliott said. It was the year revaluation took place, he said.

There was a major pay increase for law enforcement, increased capital funding for Pitt County Schools and Pitt Community College, an increased bond payment that allowed the county to pay off a PCC bond and a one-time expenditure to outfit a backup 911 call center which the state required, Elliott said.

“There were a number of factors there that drove it down. … In the current year we are standing in, you increase taxes by one penny to bring the rate up,” Elliott said. Pitt County’s current tax rate is 69.6 cents per $100 valuation.

“We knew when we appropriated $4 million back in the prior fiscal year (2015-16) this was going to happen,” Elliott said.

Cassie Wilson, senior accountant with the auditing firm Martin Starnes & Associates, delivered the audit report.

Pitt County’s audit received an unmodified opinion, meaning the auditor found the county’s financial statements are fairly presented and sound.

Wilson said Pitt County ended the fiscal year with a nearly $27.7 million fund balance which is $2.66 million less than the balance on June 30, 2016, Wilson said. During the last three fiscal years, the county’s fund balance has dropped from 22.10 percent at the end of fiscal year 2014-15 to the current 18.06 percent, she said.

The county’s general fund revenues and expenditures have increased the last three fiscal years. The county’s general fund revenue in fiscal year 2014-15 was $138.2 million and its expenditures were $128.9 million. In fiscal year 2015-16 the amounts were $142.2 million and $134.1 million, respectively; and in fiscal year 2016-17 the amounts were $148.5 million and $140.8 million.

Wilson said Pitt County’s general fund revenue falls into four categories: ad valorem taxes, which account for 57 percent of revenue; restricted intergovernmental, 21 percent of revenue; other taxes and licenses, 14 percent, and other revenues, 8 percent. Other revenues include unrestricted intergovernmental transfers, permits and fees, sales and services, income investments and other revenue.

Ad valorem tax revenue rose to $85.2 million in 2017 up from $79.9 million in fiscal year 2014-15. The majority of the increase came from a 0.6-cent tax increase implemented last fiscal year.

Expenditures also were divided into four categories; 33 percent went to humans services, which includes the public health department and social services; 32 percent went to education, which included public schools and Pitt Community College; 24 percent was spent of public safety and 11 percent on other expenditures.

Wilson also reported significant changes are coming for county government audits.

New Governmental Accounting Standards Board standards will change how other post-employment benefits will be recorded in future audits.

The benefits, like health insurance, have previously been recorded as a percentage, Wilson said. The new standard will require full liability be recorded. It will require the completion of a new OPEB study, she said. The calculations will change. Wilson couldn’t say what the liability will increase to but she suspects it will be significant.

Pitt County’s OPEB liability as of June 30 was $32.7 million, said Chris McDaniel, Pitt County’s interim finance director.

Compliance reporting also will undergo significant changes, Wilson said.

The state auditor’s office is changing the way direct benefits are recorded. Portions of Medicaid will not be reported in the county audit; instead it will be recorded by the state.

The state auditor’s office also is bringing back agreed upon procedures for compliance.

The state auditor will decide the sample size auditors are required to test per county, and report information to them.

“They will tell us if it is 100 cases, 300 cases — or who knows what they are going to tell because at this point it’s still in the works and undecided,” Wilson said.

The changes will create more work for county staff and the auditor’s staff, she said.

Contact Ginger Livingston at glivingston@reflector.com or 252-329-9570. Follow her on Twitter @GingerLGDR.