By Graham Sturgeon, staff writer
The Shiawassee County Board of Commissioners was presented with their 2014 audit report during their June 17 Committee of the Whole meeting, and there were really no surprises for the county. Tax Filing Specialist Steven R. Kirinovic and the Abraham & Gaffney CPA Firm of East Lansing gave the county an “unmodified opinion,” which is the highest standard the county can achieve.
While the “unmodified opinion” rating is positive because it means that the county has done a commendable job of accounting for and managing their finances, it does not address the actual state of their financial situation. Kirinovic told the board that, even though they are not necessarily where they want to be financially, their present situation is actually very common compared to neighboring municipalities.
Kirinovic reported that the county began their 2015 fiscal year with an unassigned fund balance in the General Fund of $1,264,000, which amounts to 7.7 percent of the county’s annual expenditures of approximately $15,740,000. Kirinovic said that most CPA firms recommend a percentage in the 15 to 20 percent range, but that the county’s lower “unassigned fund percentage” is certainly more common in the present economic landscape.
Kirinovic also addressed the county’s transferring of money into the General Fund from the Delinquent Tax Fund over the last five years. He cautioned the county that they will have to find another way to cover their expenses in the future, because the Delinquent Tax Fund will not be able to sustain itself if the county continues to draw from it at a rate similar to the last five years.
“Over the last five years, the county took a little over $1 million in 2010, about $440,000 in 2011, half a million dollars in 2012, $700,000 in 2013 and $1.2 million in 2014,” reported Kirinovic. “We talked about this when we met Monday; depending on the numbers, you probably have two or three years of drawing from the tax fund before you will see some negative effects. I just wanted to plant the seed.”
Kirinovic also spoke about the county’s unfunded actuarially accrued liability (for pensions), which will need to be 100 percent funded by Dec. 31, 2015. The county currently has approximately $9 million in their Governmental Activities Fund, but adding the nearly $30 million in pension responsibilities that the county has leaves that fund approximately $20 million in the red starting in 2016. Kirinovic stated that this is an issue that the county saw coming, but they will need to figure out a way to finance this debt in the future.