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HomeMy WebLinkAbout2023/07/11 WORKSHOP SESSION 1:30PMr1-7- D 20D JUL -1 P 3. 25' BRAZOS COUNTY B RYAN, TEXAS NOTICE OF MEETING AND AGENDA WORKSHOP SESSION BRAZOS COUNTY COMMISSIONERS COURT BRAZOS COUNTY COMMISSIONERS WILL MEET IN WORKSHOP SESSION AS FOLLOWS: MEETING DATE: July 11, 2023 MEETING TIME: 1:30 PM MEETING PLACE: Commissioners Courtroom of the County Administration Building, 200 South Texas Ave., Suite 106, Bryan, TX 77803 1. Call to Order 2. Presentation and discussion of estimated fund balance for budgetary purposes and fund balance policy by the County Auditor. 3. Adjourn The Commissioners Courtroom of the County Administration Building, 200 South Texas Ave., Suite 106, Bryan, TX77803 is wheelchair accessible. Handicap parking spaces are available. Any request for sign interpretive services must be made two working days before the meeting. To make arrangements, please call (979) 361-4102. The foregoing minutes of the Commissioners Court Meeting held July 11. 2023, have been examined and are approved in open Court this 8th day of August 2023, in Bryan, Brazos County, Texas. Duane Peters County Judge uck Konderla Commissioner, Precinct 2 14-zt� - - Wanda J. Wat Commissioner, recinct 4 Attest: Steve Aldrich Commissioner, Precinct 1 Nancy Berry Commissioner, Precinct 3 MINUTES J U LY 11, 2023 BRAZOS COUNTY COMMISSIONERS COURT WORKSHOP SESSION 1. Call To Order A workshop session of the Commissioners' Court of Brazos County, Texas was held in the Brazos County Commissioners Courtroom in the Administration Building, 200 South Texas Avenue, in Bryan, Brazos County, Texas, beginning at 1:30 p.m. on Tuesday, July 11, 2023 with the following members of the Court present: Duane Peters, County Judge, Presiding; Steve Aldrich, Commissioner of Precinct 1; Chuck Konderla, Commissioner of Precinct 2; Nancy Berry, Commissioner of Precinct 3; Wanda J. Watson, Commissioner of Precinct 4; Karen McQueen, County Clerk. The attached sheets contain the names of the citizens and officials that were in attendance. 2. Presentation and discussion of estimated fund balance for budgetary purposes and fund balance policy by the County Auditor. Judge Peters called the meeting to order and invited Budget Analyst Nina Payne to begin the presentation. Ms. Payne noted that she would be presenting in the Budget Officer's absence. She explained that the purpose of the workshop is for the Court to offer direction on the Fund Balance Policy and to discuss fund balance projections for the coming years. Ms. Payne went over revenues and expenditures to -date and shared projections through the year 2027, that show a significant overall decrease to the General Fund. She reiterated that the numbers are just projections and that there are many variables that could impact the County financially such as catastrophes, economic shifts and unforeseeable projects. She asked the Court if there were any additional projects on the horizon that the Budget Office should take into consideration. Judge Peters stated that he believes the 911 Dispatch Center project will cost significantly more than the $5 million noted in the projections. Additionally, Commissioner Aldrich shared that the Health Department is outgrowing its current facility and will likely need more space soon. Ms. Payne then discussed the anticipated unreserved fund balance for the year ending September 30, 2023. The estimated total is $66,333,766. Commissioner Berry requested clarification on fund balance from last year. Discussion ensued between the Court regarding the fiscal impact of the No New Revenue Tax Rate that was adopted for the FY 2022-2023 Budget. Commissioner Aldrich then shifted the discussion to the fund balance policy and utilizing a new method of accounting for the Committed Fund Balance. While he stated that he is in favor of the new method, he questioned whether it was best practice to include Capital projects in the 25 percent calculation or to base it on recurring expenditures. Judge Peters clarified that Capital projects can have ongoing expenses. Ms. Payne announced that there will be another Budget Workshop in August. Judge Peters then adjourned the meeting. A copy of the presentation materials are attached. 3. Adjourn Pg k of., BRAZOS COUNTY COMMISSIONER'S COURT //�L—DAY OF , 20-:2--3 Zi-,v PM, �.v��J Name (PLEASE PRINT) r • ' PMV scuKto �Im.�*&ts wl�ar akQ �t o Organization (PLEASE PRINT) i5 /L i �✓�c fE�-s ��.r� k L N- Revenues - General Fund & General Capital Improvement Taxes Charges for Services Interest Other Revenues General Fund Reserves Restricted ARPA- Revenue Replacement Capital Improvement Reserves Intergovernmental Other Financing Sources Total Revenues - General Fund Expenditures - General Fund & General Capital Improvement General Government Justice System Law Enforcement Juvenile Services Public Health Human Services Public Transportation Grant Match and Courthouse Security Transfer ARPA - Revenue Replacement General Capital Improvements Total Expenditures - General Fund Brazos County, Texas Consolidated General Fund and General Capital Improvement Fund FY 22-23 Revenues and Expenditures Year to date at June 30, 2023 and Projected at September 30, 2023, 2024, 2025, 2026, and 2027 Percent Adopted Budget As age Amended Year To Date Projected at 9.30.23 Projected at 9.30.24 Increase Projected at 9.30.25 Projected at 9.30.26 Projected at 9.30.27 $ 127,148,000 $ 112,620,520 $ 118,624,160 $ 123,369,126 4% $ 128,303,891 $ 133,436,047 $ 138,773,489 11,771,570 9,964,671 11,101,761 11,212,779 1% 11,324,906 11,777,903 11,895,682 2,440,000 4,936,089 7,000,000 5,000,000 5,000,000 5,000,000 5,000,000 1,805,987 962,226 975,000 1,004,250 3% 1,034,378 1,065,409 1,097,371 36,895,357 - - - - - 14,865,013 22,051,837 14,823,837 7,506,096 9,472,000 - - - - 8,916,000 7,949,114 8,250,OOD (1) 1,000,000 3,000,000 3,000,000 3,000,000 210,000 113,321 210,000 210,000 210,000 210,000 210,000 $ 213,523,927 $ 136,545,941 $ 146,160,921 $ 163,847,992 $ 163,697,012 $ 161,995,455 $ 159,976,542 $ 46,276,478 $ 23,684,370 $ 32,986,498 $ 36,285,148 10% $ 39,913,663 $ 43,905,029 $ 48,295,532 28,257,812 17,891,847 23,772,150 24,960,758 5% 26,208,795 27,519,235 28,895,197 31,798,296 20,579,845 28,630,130 30,061,637 5% 31,564,718 33,142,954 34,800,102 9,190,750 5,054,702 6,813,820 7,154,511 5% 7,512,237 7,887,848 8,282,241 7,798,425 1,423,116 2,255,110 2,480,621 10% 2,728,683 3,001,551 3,301,707 5,676,572 3,664,985 4,758,357 5,139,026 8% 5,550,148 5,994,159 6,473,692 32,293,652 10,887,235 19,608,010 20,588,411 5% 21,617,831 22,698,723 23,833,659 778,314 294,951 700,000 500,000 5% 525,000 551,250 578,813 22,164,837 45,279 113,000 7,228,000 7,317,741 5,288,155 - 29,288,791 (2) 1,462,357 4,856,681 (3) 20,707,932 17,430,680 14,710,416 3,595,436 $ 213,523,927 $ 84,988,687 $ 124,493,756 $ 155,106,042 $ 160,369,496 $ 164,699,321 $ 158,056,377 Revenues Less Expenditures (Deficit) $ (0) $ 51,557,254 $ (1) includes $7.29 million in revenue replacement for FY 22-23 and zero in FY 23-24 due to NNR (2) Includes fund balance in the General Capital Improvement fund at September 30, 2022 of $9,472,000 21,667,165 $ 8,741,950 Page 1 $ 3,327,517 $ (2,703,866) $ 1,920,164 Sum 2023 thru 2027 $ 32,952,930 22.23 Projections 6.30.23 (3) Projects : General Capital Improvements: Courthouse Security Upgrade 2022-2023 Vehicles Order Medical Examiner -Land Road & Bridge Equipment shed Road & Bridge Building Misc Computer Hardware, Software and Equipment 23-24 Vehicle Order/Vehicles Remodel former Agri -Life Building 911 Dispatch General Storage Public Safety Storage Feasibility study for 100 Anderson Copiers Courthouse Phase VI -former 361st Total General Capital Improvement ARPA Revenue Replacement: R U OK? - in General Fund Scotty's House - in General Fund HVAC/Air Purification Systems Friends for Life Housing Assistance Feasibility Study BISD BISD property renovations Medical Examiner ARPA Discretionary Total ARPA Revenue Replacement Adopted Budget As Amended $ 1,000,000 1,958,452 2,100,000 322,000 6,300,000 16,207,762 2,000,000 24,253 76,500 $ 29,988,967 $ 86,346 26,000 1,500,000 16,200 250,000 150,000 9,367,741 4,605,896 6,162,654 22,164,837 Year To Date Projected at 9.30.23 Projected at 9.30.24 $ 797 $ 400,000 $ 600,000 875,118 900,000 1,058,452 25,000 1,802,628 - 21,000 35,000 287,000 56,300 56,300 500,000 431,006 1,500,000 7,822,480 - 350,000 500,000 5,000,000 - 2,000,000 21,000 62,000 2,000,000 12,798 24,253 19,338 76,500 90,000 500,000 $ 1,462,357 $ 4,856,681 $ 20,707,932 1,978 $ 15,000 $ 50,000 26,000 - 43,301 72,000 78,000 - 4,600,000 - 2,500,000 $ 45,279 $ 113,000 $ 7,228,000 $ 1,507,636 $ 4,969,681 $ 27,935,932 Page 2 Projected at 9.30.25 Projected at 9.30.26 Projected at 9.30.27 2,000,000 2,000,000 10,180,680 11,960,416 2,845,436 750,000 750,000 750,000 2,000,000 2,000,000 500,000 $ 17,430,680 $ 14,710,416 $ 3,595,436 $ 50,000 $ 50,000 1,500,000.00 16,200.00 250,000.00 0 4,767,741 4,605,896.00 - 2,500,000 632,259.00 451,741.00 $ 7,317,741 $ 5,288,155 $ - $ 24,748,421 $ 19,998,571 $ 3,595,436 22.23 Projections 6.30.23 BRAZOS COUNTY, TEXAS GENERAL FUND ANTICIPATED UNRESERVED FUND BALANCE For The Year Ending September 30, 2023 Fund Balance at October 1, 2022 $ 136,154,224 Reserved Balances: Nonspendable Fund Balances: For Prepaid Expenditures 1,851,513 For Inventories 1,663,167 (3,514,680) Restricted Fund Balances: For Pre -Trial Bond Program 533,995 For Vital Statistics 60,425 For Title IV-E Programs 31,028 For Family Protection Services 80,900 For Revenue Replacement Calendar Year 2020 6,419,821 For Revenue Replacement Calendar Year 2021 8,445,192 (15,571,361) Unrestricted Spendable Fund balance at September 30, 2022 $ 117,068,183 Restricted Fund Balance: For Revenue Replacement Calendar Year 2022 7,299,824 (7,299,824) Assigned Fund Balance FY 22-23 Contingency 6,000,000 FY 22-23 Indigent Health Care 5,000,000 FY 22-23 Capital Improvements & Roads 19,014,000 (30,014,000) Unrestricted, Unassigned, Spendable Fund Balance at October 1, 2022 79,754,359 Committed Fund Balance 25% of FY 21-22 Actual Expenditures 27,901,134 (27,901,134) Unrestricted, Unassigned, Uncommitted, Spendable Fund Balance at September 30,2023 51,853,225 For The Year Ending September 30, 2023: Estimated Revenues Less Revenue Replacement Estimated Expenditures Estimated Unreserved and Unrestricted Fund Balance (September 30, 2023) 138,861,097 (124,380,556) $ 66,333,766 Estimated revenues is based on 92% of Current Ad Valorem budget and the County Auditors projections based on year to date actuals. Estimated expenditures based on expending the same percentage of budget as spent in FY 21-22 and includes 25% of 22-23 Budgeted General Fund Expenditures $ 49,808,302 Less Budgeted Contingency 25% of 21-22 Actual General Fund Expenditures $ 27,901,134 Including Transfers out 17% of 22-23 Budgeted General Fund Expenditures $ 33,869,645 Less Budgeted Contingency 17% of 21-22 Actual General Fund Expenditures $ 18,972,771 Including Transfers out P. 9 kk BEST PRACTICES Fund Balance Guidelines for the General Fund Governments should establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund for GAAP and budgetary purposes. In the context of financial reporting, the term fund balance is used to -describe the net position of governmental funds calculated in accordance with generally accepted accounting principles (GAAP). Budget professionals commonly use this same term to describe the net position of governmental funds calculated on a government's budgetary basis.1 While in botl cases fund balance is intended to serve as a measure of the financial resources available in a governmental fund; it is essential that differences between GAAP fund balance and budgetar fund balance be fully appreciated. 1. GAAP financial statements report up to five separate categories of fund balance based on the type and source of constraints placed on how resources can be spent (presented in descending order from most constraining to least constraining): nonspendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance.z The total of the amounts in these last three categories (wher( the only constraint on spending, if any, is imposed by the government itself) is termed unrestricted fund -balance. In contrast, budgetary fund balance, while it is subject to the same constraints on spending as GAAP fund balance, typically represents simply the tot; amount accumulated from prior years at a point in time. 2. The calculation of GAAP fund balance and budgetary fund balance sometimes is complicated by the use of sub -funds within the general fund. In such cases, GAAP fund balance includes amounts from all of the subfunds, whereas budgetary fund balance .typically does not. 3. Often the timing of the recognition of revenues and expenditures is different for purpos( of GAAP financial reporting and budgeting. For example, encumbrances arising from purchase orders often are recognized as expenditures for budgetary purposes, but never for the preparation of GAAP financial statements. The effect of these and other differences on the amounts reported -as GAAP fund balance and budgetary fund balance in the general fund should be clarified, understood, and documentec It is essential that governments maintain adequate levels of fund balance to mitigate current and future risks (e.g., revenue shortfalls and unanticipated'expenditures) and to ensure stab tax rates. In most cases, discussions of fund balance will properly focus on a government's general fund. Nonetheless, financial resources available in other funds should also be considered in assessing the adequacy of unrestricted fund balance in the general fund. GFOA recommends that governments establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund for GAAP and budgetary purposes.3, Such a guideline should be set by the appropriate policy body and articulate a framework and process for how the government would increase or decrease the level of unrestricted fund balance over a specific time period.4In particular, governments should provide broad guidance in the policy for how resources will be directed to replenish fund balance should the balance fall below the level prescribed. Appropriate Level. The adequacy of unrestricted fund balance in the general fund should tal into account each government's own unique circumstances. For example, governments that maybe vulnerable to natural -disasters, more dependent on a volatile revenue source, or potentially subject to cuts in state aid and/or federal grants may need to maintain a higher level -in the unrestricted fund balance. Articulating these risks in -a fund balance policy makE it easier to explain to stakeholders the rationale for a seemingly higher than normal level of fund balance that protects taxpayers and employees from unexpected changes in financial condition. Nevertheless, GFOA recommends, at a minimum, that general-purpose governments, regardless of size, maintain unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures.5. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable in a government's particular circumstances.6 Furthermore, a government's particular situation often may require a level of unrestricted fund balance in the general fund significantly in excess of this recommended minimum level. In any case, such measures should be applied within the context of long -tern forecasting, thereby avoiding the risk of placing too much emphasis upon the level of unrestricted fund balance in the general fund at any one time. In establishing a policy governing the level of unrestricted fund balance in the general fund, a government should consider a variety of factors, including: 1. The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of unrestricted fund balance may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile); 2. Its perceived exposure to significant one-time outlays (e.g., disasters, immediate capital needs, state budget cuts); 3. The potential drain upon general fund resources from other funds, as well as, the availability of resources in other funds; 4. The potential impact on the entity's bond ratings and the corresponding increased cost of borrowed funds; 5. Commitments and. assignments (i.e., governments may wish to -maintain higher levels of unrestricted fund balance to compensate for any portion of unrestricted fund balance already committed or assigned by the government for a specific purpose). Governments may deem it appropriate to exclude from consideration resources that have been committed or assigned to some other purpose and focus on unassigned fund balance, rather than on unrestricted fund balance. Use and Replenishment. The fund balance policy should define conditions warranting its use, and if a fund balance falls below the government's policy level, a solid plan to replenish it. In that context, the fun balance policy should: 1. Define the time period within which and contingencies for which fund balances will be used; _ 2. Describe how thA vernment's expenditure and/or revenue levels will be adjusted to match any new economic realities that are behind the use of fund balance as a financing bridge; - - - - 3. Describe the time period over which the components of fund balance will be replenished and the means by which they will be replenished. Generally, governments should seek to replenish their fund balances within one to three years of use. Specifically, factors influencing the replenishment time horizon include: 1. The budgetary reasons behind the fund balance targets; 2.. Recovering from an extreme event; 3. Political continuity; 4. Financial planning time horizons; 5. Long-term forecasts and economic conditions; 6. External financing expectations. Revenue sources that would typically be looked to for replenishment of a fund balance includ nonrecurring revenues, budget surpluses, and excess resources in other funds (if legally permissible and there is a defensible rationale). Year-end surpluses are an appropriate sour( for replenishing fund balance. Unrestricted Fund Balance Above Formal Policy Requirement. In some cases, governments - can find themselves in a position with an amount of unrestricted fund balance in the general fund over their formal policy reserve requirement even after taking into account potential financial risks in the foreseeable future. Amounts over the formal policy may reflect a structural trend, -in which case governments should consider a policy as to how this would be addressed. Additionally, an education or communication strategy, or at a minimum, explanation of large changes in fund balance is encouraged. In all cases, use of those.funds should be prohibited as a funding source for ongoing recurring expenditures. Notes: I. For the sake of clarity, this recommended practice uses the terms GAAP fund balance and budgetary fund balance to distinguish these two different uses of the same term. 2. These categories are set forth in Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. 3. Sometimes restricted fund balance includes resources available to finance items that typically would require the use of unrestricted fund balance.(e.g., a contingency, reserve). In that case, such amounts should be included as part of unrestricted fund balance for purposes of analysis. 4. See Recommended Practice 4.1 of the National Advisory Council on State and Local Budgeting governments on the need to "maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees because of temporary revenue shortfalls or unpeedicted one-time expenditures" (Recommended Practice 4.1). 5. In practice, a level of unrestricted fund balance significantly lower than the recommended minimum may be appropriate for states and America's largest governments (e.g., cities, counties, and school districts) because they often are in a better position to predict contingencies (for the same reason that an insurance company can more readily predict the number of accidents for a pool of 500,000 drivers than for a pool of fifty), and because their revenues and expenditures often are more diversified and thus potentially less subject to volatility. . 6. In either case, unusual items that would distort trends (e.g., one-time revenues and expenditures) should be excluded, whereas recurring transfers should be included. Once the decision has been made to compare unrestricted fund balance to either revenues and/or expenditures, that decision should be followed consistently from period to period. This best practice was previously titled Appropriate Level of Unrestricted Fund Balance in --the-General Fund B-oard- a-pprova-I date: Wednesday, September 30, 2015