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July 3, 2014

Hamilton: Auditor gives county thumbs up

Jasper — A presentation on the results of the 2013 fiscal year audit was given to the Hamilton County Board of County Commissioners recently by auditor Ken Daniels Jr., who began by saying, the county received “a clean opinion on the audit.”

“You’ll see they changed the format on the audit opinion,” Daniels told the board. “They want to make clear what’s your responsibility and certainly what’s mine. It seems everything in here is your responsibility except for this opinion,” he added with a chuckle. “You did get a clean opinion. You got a good opinion, so that’s a good start.”

Daniels said the county ended the year with a real strong cash position of almost $11 million.

“That’s an increase of almost $1 million over a year,” he said.

Audit highlights

Receivables: Because EMS receivables were cleaned up in 2013, Daniels said, that figure dropped about $100,000. Monies due from other governmental units went down about $1 million, as well.

“That number affects cash and vice versa,” said Daniels.

He explained that if the county was in the middle of a grant cycle, most likely they would have a lot of money owed to them, which was the case in 2012. The State Road 6 project wrapped up in 2013 and the county got paid, so that upped the cash level. Capital assets increased about $3.3 million, which is the product of the SR 6 project, he explained.

Payables: Accounts payable had no issues and the courthouse grant monies, Daniels said, will probably be spent sooner rather than later.

About .76 cents of every dollar spent by the county went toward public safety, Daniels said, which amounted to a net cost of $5.67 million.

“That was a very large number and it dwarfs everything else,” said Daniels.

Ad valorem: A total of $7.56 million was collected in ad valorem taxes for FY 2013.

“That’s the largest amount you have ever collected,” he told the commissioners.

Funds: Daniels said there are two important funds, the general fund and transportation trust fund.

“The general fund pretty much tells the tale,” he said.

The county currently has $7.4 million in reserves and is headed toward $8 million soon.

“That’s probably going to be the top,” he said. “You don’t need any more. Eight million dollars in reserves is plenty.”

The transportation trust fund, he said, has been weak, however, with the $1.3 million diesel fuel tax that was distributed two months ago, the trust fund will improve.

“You’re going to see some strength in the transportation trust fund starting this year, plus there’s still some lag,” said Daniels. “Those gasoline prices are going to rise, too.”

The general fund revenue, Daniels said, is pretty much flat with $12.4-$12.5 million a year.

“There’s just not a lot of change there,” he said.

Future significant events

Shrinkage at PotashCorp is going to reduce ad valorem taxes, Daniels said, however, it is still unknown by how much.

“I’ve heard ranges from little or nothing, to $1 million,” said Daniels.

The addition of the rural health clinic is also going to affect the county by about $100,000 a year, he added, stating that both of those things are going to negatively affect the general fund. He urged the board to be aware of it and act when they can and not when they have to.

“That’s kinda been your modus operandi over the past few years,” he said.

The “problem children”

Daniels reviewed a few accounts that he referred to as “problem children” that included utilities and the landfill. The Class 3 landfill, he said, has been open about eight years and is at 20 percent of its capacity now.

“That means you’ve probably got another 32 years out there,” he said.

Normal life expectancy of such a landfill, he said, is about 40 years.

“We hope they’re not filling up that hole with dirt,”said Daniels. “That’s a very expensive hole to fill up with dirt. That’s something you might want to look at.”

Later during the audit, Daniels added that the county may also want to check into making sure receipts at the landfill are being properly documented.

In 2010, the county’s contribution to the Florida Retirement System (FRS) was $800,000. When employees began contributing three percent, that number went down to $500,000, Daniels explained, and this year it is $600,000.

“You know there’s going to be a raise,” Daniels said. “I already read the legislature. They’ve jacked the rates up again. That’s probably going to be a fairly sizable number to deal with. You’re headed back to $800,000, I can almost guarantee you.”

Daniels explained there is a $22 billion deficit in the FRS and a new accounting standard (GASB 67) puts some of that deficit back on the county. He told the commissioners they needed to be forewarned that it is most likely coming.

“You haven’t contributed enough money into the FRS to make it solvent,” he said, meaning everyone, not just Hamilton County, who contributes to the FRS. “Now, they’re saying you’re going to have to put part of that liability on your books. It’s going to be significant.”

Other

Daniels said he had no major issues with internal control or compliance.

On EMS billing, he said even though it is now going to be contracted out, he urged the county to stay atop of it to be certain every call gets billed.

The county recreation department, he said, showed inconsistencies in how much each child paid to participate in sports programs. Some of them paid, although at seemingly different rates, and others didn’t pay at all.

“It may be something you’d want to look at, and there may be some rationale to it, but it appears to be haphazard,” he said.

Additionally, he said concessions are losing money with a gross profit of 25 percent.

“By the time you pay someone, you’re actually losing money on concessions,” said Daniels.

SHIP program paperwork, Daniels said, needed to be more organized with any and all pertinent information and documents all in one specific file.

When the county awards funds to an organization, Daniels said, that transaction needs to be followed up on and proof of how the money was used needs to be fully documented with a check register or invoice. That way they will know the money was spent according to their wishes.

“You can’t lose sight of those public dollars,” he said. “Most of that you were able to prove this year, but we still have a few.”

Any leftover monies from tax deed sales must (since July 1, 2011) go to the state according to Florida statutes, and not the county, as was the procedure a few years ago, Daniels explained. County Clerk Greg Godwin said he is working to ensure they are in compliance.

Closing comments

Daniels said he would encourage the commissioners to obtain from the property appraiser an expert opinion on what the taxable value will be for the county for the next two years. He also reminded them about the extra costs coming soon for the FRS, as well as the extra costs for the rural health clinic.

“You cannot calculate this year and ignore the next and the next, because you’re probably going to have a bigger movement,” said Daniels. “You’ve got to think about this in a three-year chunk,” he added, referring to the county budget. “You can’t just say we’re okay this year and forget the next two.”

He also reminded the board that they “do not use reserves to fund operating expenses.”

“You just don’t do that,” he said. “You’ll use your reserves, you’ll be broke, and you’ll still have to make the tough decisions down the road.”

Aside from the few negative findings, Daniels said the county was in excellent financial shape right now.

“Absolutely excellent,” he said. “I’m very pleased with it and every one of you should be pleased, as well.”

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