N - County carryovers show more money than actual reserves

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Taylor County’s finances received a clean bill of health with its most recent audit, but was given the warning that audit costs could be going up due to implementation of additional rules for accounting for accrued leave time.

Auditor Jon Trautman from Clifton Larson Allen presented the December 31, 2023 audit at the February 13 county finance meeting. The 2024 year-end audit is underway with the hope to have it presented later this year. The audit did not show any major areas of concern. However, Trautman noted some potential issues going forward with the county’s reserve funds.

Like many governments, Taylor County departments utilize reserve or carryover funds to set aside money for planned future purposes and to assist with cashflow of county operations. These are divided between assigned funds, those tied to a specific purpose, and unassigned funds.

The county has about $3.5 million in reserve funds, which Trautman said was an adequate amount of reserves given the county’s budget at 22% with auditors liking to see between 20 and 25% of revenue in reserves. However, he raised concern that the reserves were almost entirely designated for particular areas.

“You have effectively assigned every dollar you have,” he said. Since the county board can at any time vote to move money from one area to another in the budget this is not as major of an issue.

Potentially, the bigger concern, however, is that the total amount listed as carryover balances is $4.9 million which exceeds the county’s actual total fund balance. “The reality is all those assigned fund balances aren’t there,” he said.

Trautman noted there is validity to assigning fund balance, but there should be a mix of assigned and unassigned. He also advised the committee of the need to subtract $1.5 million from what is listed in the carryover accounts to equal it with what is actually available.

Committee member Mike Bub questioned if this would impact the county’s bond rating. “I am thinking no,” replied Trautman, saying the way it looked is that the bond companies were viewing it all as fund balance available. Going forward, Trautman said the county will have to follow new rules over how accumulated absence leaves are accounted for. These can be things like banked sick leave or compensatory time. He said he anticipates the vested portion is probably accounted for, but there is the unvested portion. He said they will need to determine how likely it is to get paid out or used.

“This will be a little bit of work,” he said cautioning that as with other rule changes, this will require more hours of work for the county’s staff and the auditors to get set up.

In other business, committee members approved a budget transfer to correct an error on the county library allocation. The county board had approved an additional $25,000 to be split evenly between the five libraries in the county as part of the special library levy. An error had been made and the county needed to take it from the general fund for this year. When asked if the county had a choice in approving the transfer, county finance director Tracy Hartwig said, “I don’t think we have a choice, but I wanted to let you know.”