Logan County audit of 2017/2018 - pension liability down, general fund balance up

 

[May 09, 2019] 

LINCOLN 

At their Regular board meeting on Tuesday, April 16, the Logan County Board heard an update from Clifton Larson Allen representative Adam Pulley on the Auditor’s Report for Fiscal Year 2017-2018.

As in past years, the firm issued financial statements, single audit report, alert of governance, and a management letter. Pulley said the firm issued an “unmodified or clean audit on the financial statements,” which is the best you can get.

Pulley shared some of the findings with the board. The firm issued a single audit report on the county’s grant programs after examining the WIC and EMA grants and issued unmodified opinions on both federal programs, though Pulley said some benefits charged to federal grants were calculated incorrectly. These differences were very small, but Pulley said they still must be noted in the audit.

The firm helped the county put together financial statements as well as audit adjustments, but Pulley said since his firm is not part of the county’s internal control, that must be noted as a finding.

New pension standards that came out a few years ago have put a large liability on the county’s books and affected counties throughout the state. Pulley said one area of emphasis was the liability on post-employment benefits for retirees health care, which was $414,000 as of November 2018. The entire liability did not run through the county’s expenses, so Pulley said pension liability and health care for retirees is driven by “actuarial assumptions” and is not a concrete number that shows the county owes this money. The amount just reflects benefits being earned by all the employees over time.

Through doing a trend analysis of pensions and retirement benefits, Pulley said, in 2015-2016 these benefits were in an asset position, but under the new pension standards are now a liability. In 2016 and 2017, the net pension liability increased, but in 2018, the liability decreased to almost nothing, which Pulley said was because the Illinois Municipal Retirement Fund had a good year investment wise.

The net position of the county for assets minus liabilities increased from $15.1 million in 2017 to almost $16 M in 2018. Pulley said of the $16 M,

$8.3 M of it is invested in capital assets, $4.7 M is restricted for purposes such [as those funds that come from] grants and property taxes, and the remaining $3 M is unrestricted.

Other changes in revenues included an increase from $4.3 M to $4.8 M for charges, fees, and miscellaneous receipts, which Pulley said reflects wind farm permit revenue that came in during 2018.

Operating and capital grants decreased because back in 2017 the county received $475,000 worth of capital contributions to ambulances. Pulley said there was also an increase to the transportation grant in 2017.

Expenditures decreased from $16.2 M to $14.5 M, but Pulley said that is a bit misleading because over $ 1 M in expense savings was due to the pension liability expenses going down.

Some areas saw an increase in the county’s bottom line. For instance, Pulley said the total fund balance level of all the county’s funds increased from $9.5 M in 2017 to $10.3 M in 2018. In the area of unassigned balance in the general fund which is not restricted, committed or assigned for any specific purpose, the end balance increased from $704,000 in 2017 to $1.2 M in 2018.

General fund expenditures in 2018 were roughly $7.2 M. Pulley said the unassigned fund balance covers about two months of worth of general fund expenditures, which is an improvement from last year’s statements.

Chuck Ruben, who chairs the county’s Finance Committee, said he wants to see three to four months’ worth of expenditures for the year. Pulley said covering 25 percent of expenditures is a good benchmark, so numbers are trending in the right direction.

Pulley said a couple items that are not considered findings but should be mentioned showed four out of 16 hire dates tested by the actuary were off and a couple of certificates of error were not retained in files. Overall, though, Pulley said there were no disagreements with the numbers.

Pulley thanked Logan County Treasurer Penny Thomas for her hard work. Working with the new software is not easy and Pulley said he appreciates Thomas’ patience with his firm.

Ruben said he had heard that the county employees, elected and appointed officials enjoyed working with Pulley and his staff. Every year, the report seems to get a little better.

The board unanimously approved the audit.

[Angela Reiners]