Budget Workshop #1 Review - Updated
Most residents that I know are asking, so I thought I would share. No, none of the sitting board members, neither the outgoing, nor those who are staying, have reached out to say anything to me regarding the win on Tuesday. It is my understanding that it is considered polite in politics for the one who lost the election to reach out to the winner(s) and offer a concession and/or congratulations -- and perhaps even a token offer of aiding with the transition. Alas, I shouldn't be shocked, but I freely admit that I am.
After much delay, we appear to be finally having the first of our Budget Workshops (in two years -- as there was NO budget workshop last year). As a trustee-elect, I'm expecting to be participant in this workshop and as such, I've been preparing my review. And since I'm a sharer, I'm sharing my high level questions with you.
One of the things that seriously bothers me about the way these numbers are presented is that there's no reality check -- there should be a column for "expenses to date" Sadly, we don't have updated Revenue and Expenditure reports past December, so I added that (plus all prior year's actuals) to my review. If you find this helpful, you may download your own version of this spreadsheet here. I took the time to manually type it all up -- might as well share. All funds that are being reviewed in this workshop are updated, I'll repost the file when I get the amendments and budgets for the rest of the funds. I created a summary by fund so you can see the history of the funds from FY '17 forward.
Prior to posting I sent my questions to our CAO and she responded -- so I'm appending this with her notes -- which are in blue.
Notes from the General Fund review:
I can not find where to match the Carry Over from prior year in the General Fund summary in any financial document. Specifically, this section of the report:
I asked the CAO where these numbers came from, she responded with the definition of Carry Over. I've followed up with my question again. Hopefully she'll understand I don't need a definition, I need to know where I can confirm this number is accurate and this is why:
Naturally I looked at the audit to try to find a confirmation that the Carry Over number is accurate. So, if the audit is accurate, I've updated this block to reflect the numbers from the audits:
The green highlighted boxes are directly from the past two audits. Additionally, it doesn't appear that the "Actuals" are accurate from the end of year financials. Now it is possible that the end of year financials have changed post audit and I asked for updates when I met with the CAO/Finance Director/Budget Officer on Friday, April 2nd --- I am still waiting.
I added the %'s of fund balance to expenditures just to see if the numbers we are told match up with what I am able to see from the shared financials. They appear to be lower than what we keep being told; but within the fund best practices of 30-50%.
From this summary, it appears that we brought in $500K more revenue into the General Fund than budgeted. Some of this appears to be the CARES Act Grant (~$100K); both sales tax and income tax are coming in $100K higher than budgeted (it appears that the revenue is in line with all previous years, and likely a reflection that there was not a huge hit due to COVID in this year); and finally, there's $77K in unexpected revenue from the sale of the RedTail lots.
For the amendment questions:
General Fund: Why does Engineering Services not have enough budgeted in the amendments to cover the spend through the end of December? CAO states that she reviewed the invoices and found that these were incorrectly booked to the wrong GL #. She says there will be a GL adjustment (will the board be approving this? notified if I hadn't asked? Who knows?) She says that the $13K in Building Dept should be GL #8437 (Inspection Services). If this is the case, then the amendment covers this amount.
Personal note -- this is why I think it is CRITICAL to show the YTD numbers -- it's the only way you catch these things.
For the budget questions:
General Fund Revenue: While our Finance Director calls out the lack of CARES Act monies, it appears that she's forgotten that on 3/11/2021, the federal level American Rescue Plan will be allocating about $494K (it's divided into two payments from what I understand) in our FY '22. Read about it here. CAO States that she's 'monitoring this' but doesn't think we will be able to qualify for more than sewer, water, and broadband with the money.
Here's what the act says we can use the funds for:
Municipalities will be allowed to use ARP funds on eligible costs incurred by December 31, 2024. Eligible costs include:
Costs to respond to the public health emergency with respect to COVID-19 or its negative economic impacts, including assistance to households, small businesses and nonprofits, or aid to impacted industries such as tourism, travel and hospitality;
Costs to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the municipality that perform essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
Costs for the provision of government services to the extent of the reduction in revenue of a municipality due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the municipality; or,
Costs to make necessary investments in water, sewer and broadband infrastructure.
General Fund Expenditures: What is happening with health insurance for the village?
Finally, it appears that GL # 8619 Misc. Expenses is budgeted twice for General Fund Administration. It's on two different pages in the worksheet, but not different departments -- so I'm unclear if she wants $250 for this line item or $500. Historically this hasn't been a used GL -- until our current CAO. CAO says it is twice on purpose because one is under personnel and the other under contracted services. That's not how our GL is set-up -- it's the same GL#, in the same department -- so you double the amount requested.
From the General Capital Fund and Motor Fuel Tax Review:
Next we look at the General Capital Fund and the Motor Fuel Tax. I look at these together because of our roads, we essentially divide the costs between these two funds. Now, the good news is that we have a grant to repave Haligus from Lakewood Rd to the Northern Border of the Village. This is an 80/20 cost split with the McHenry County Council of Mayors' Surface Transportation Program. My understanding is that we front this money and get reimbursed, but I am going to inquire with our CAO to confirm if that's the case.
From the SSA Review:
For the SSA's -- I'm not being flip -- but as of December of 2020, the only SSA in our village that had an expense was SSA #8. But this one has been intriguing me for a long time: SSA #2.
When I go through past budgets and past audits, something similar to what is in this budget workshop review is listed:
This is revenue and expenditure history for Brighton Oaks:
Anything odd catch your eye? Yup, since our CAO has been hired, Brighton Oaks' SSA hasn't paid electric. So, in my meeting with her on April 2nd, I asked. She tells me that the original documents don't allow for electric to be charged to the SSA and that there was some other agreement that was why they paid it prior. I have asked for a copy of this original agreement, she hasn't shared it yet. However, if this is in fact the case -- then can anyone explain to me why she a) continues to keep electricity in the description of what the SSA covers AND b) why she keeps budgeting for it without charging?
CAO says that she's charging Brighton Oaks this year for electricity. I'll admit that I'm confused by her response -- because it either IS or ISN'T permitted and should be adjusted one way or the other -- the other thing to note is she's planning on charging $275, historically when that SSA was charged regularly the amount was fair closer to $800. Hmm.
On my question about the lack of any expenses charged, she explained to me how the funds worked --- she would have been better off just saying that none had incurred expenses, if that was true. I know how funds work if they don't use the budgeted amounts -- that was not in fact what I was asking. And she tells me that for the third year in a row the Reserves is doing a front entrance project -- I'm excited to see what is happening there this year.
Lake Patrol is in the packet too -- and I'll cover my biggest question in the board meeting review because I'm not sure it's legal to approve that budget on the 13th, since the proposal hasn't been available for review to the public for 10 days and I don't think there's been a newspaper notice. However, I am concerned that it is not budgeted to at least break even. Why?