Minutes 05-16-2017 - Laserfiche WebLink

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21 change is more important to Davenport, and being able to convey the reason to the ratings agencies. Commissioner Price asked if 16.7% is a good number because it is two months of expenditures. Mitch Brigulio said he does not know if this represents two months of expenditures, but 16.7% is a reasonable level. He said other AAA counties range from 15-20%, and 16-17% makes sense. He said 17% would be the easiest to discuss with the credit rating markets because it would show no change, but the greatest consideration is to have justification for any changes that are made. Commissioner Marcoplos asked if there have been any great fund balance tragedies in North Carolina. Mitch Brigulio said the 8% state statute minimum requirement is the absolute minimum that a county and city would need to cash flow throughout the year. He said on top of that there are some additional cushions that are helpful to be able to cash flow more on your accounts. He said natural disasters, opportunities to purchase land, etc. are good examples for what the fund balance could be used for. Commissioner Marcoplos said he previously asked another Davenport colleague if a 14% fund balance would be acceptable, and that colleague said this would not be a damaging fund balance, and the County would maintain a good credit rating. Mitch Brigulio referred to page 10 of the Davenport presentation, and reviewed the AAA rating charts across the state and nation. He said the County's current percentage is right on the state median for AAA rated counties, but on a pure dollar basis Orange County has the lowest dollar amount of unassigned fund balance of all AAA rated counties in NC. Commissioner Burroughs said the County's policy is a percent of expenditures, and is slightly more conservative than percent of revenues. Mitch Brigulio said in 2016 the revenues were slightly higher than the expenditures for the purposes of Moody's calculations, and the same dollar amount on a higher denominator equals a lower percentage. He said a percent of revenues would be a little more conservative, because it would give you the lower percentage. Chair Dorosin said he is less concerned about the Moody's data, and there are some metrics, for which the County does not currently have policies, and perhaps adopting these would alleviate concerns about lowering the fund balance percentage. Mitch Brigulio said there is no one metric that will impact the County's credit rating, but rather the aggregation of everything. Chair Dorosin said the question is how important is it for them to get ahead of these expenses, and could they continue to be managed in an incremental way. He said if the County needs these funds, then access them, and if not, keep them in the fund balance. He said he knows this is a policy question, but asked if the Manager would give her educated opinion. Bonnie Hammersley said there are great needs for the County and the Schools, and the Board needs to start looking at how it will address the long-term implications of the maintenance of the school and County facilities. She said there are times when it is important to look at what needs to be done, and take a strategic approach on how to accomplish the needs. She said it is important to identify one-time expenses to be paid for with one-time funds, and recurring expenses to be paid for with recurring funds. She said the recession got the County off course, and she assumes there was an accumulation of fund balance because of the fear of uncertainty that the recession brought. She said this accumulation has somewhat hurt the County, as it was infused in the budget and put toward on-going expenses. She said this should not happen moving forward, and any fund balance surplus should go toward a one-time expense.