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Saturday, Dec. 20, 2014

County encouraged to increase year-end reserves

Thursday, January 31, 2013

Plymouth County had enough reserve dollars at the end of fiscal year 2011-12 to cover 90 days of expenses -- fewer than recommended.

Jeff Peters, of Williams & Co., in Le Mars, reviewed the county's 2011-12 audit with the county board of supervisors Tuesday.

The net general fund accrual balance was nearly $1.6 million as of June 30, 2012, which would cover about three months of operating expenses.

"If you think about your revenue stream, you get two checks a year on Oct. 15 and April 15," Peters said. "You need 100 to 120, 130 days of fund balance to get you to that spot."

He noted that the $1,584,000 reserves at the end of 2011-12 was a significant improvement from the previous fiscal year.

In 2010-11 there were $965,000 in reserves or about 60 days and in 2009-10 there were $800,000 in reserves or about 48 days, said Plymouth County Auditor Stacey Feldman.

"Each year we've gained ground with respect to increasing the reserves," she said.

Peters acknowledged the increase, but he said more work needs to be done.

"It's not one of those things where you have $1.5 million in excess you can use," he said. "You still have to tighten that budget and manage that process."

Supervisor Mark Loutsch asked if the supervisors' goal for reserve dollars should equate to covering 120 days of operational expenses.

"The state will tell you that you need 10 percent reserve, which is dangerously low," Peters said.

Feldman explained that would be about $600,000 as the county's general budget is about $6 million.

Peters suggested the supervisors look at where they receive revenue from during the year to determine how much to have in reserve.

"Of your $6.7 million of general fund revenue, $4.3 million of that is taxes. You get two checks a year," he said. "You've got to have a reserve to get you to that point -- and you are on the edge."

Peters said the nearly $1.6 million sounds like a lot of reserves, but dividing the about $6.4 million in expenses in 2011-12 throughout the year puts that into perspective.

"It's just short of $20,000 a day that it costs to operate your county," he said.

In addition to reserve dollars, the county's total net assets were $57 million at the end of fiscal year 2011-12.

Feldman explained that was an about $6 million increase from the previous fiscal year's assets.

Looking at the 2011-12 budget as a whole, Peters said the county is in compliance with all state codes and "no significant issues" were identified by the audit.

"Overall you're in pretty good financial shape," he said.



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