Agenda 02-17-22; 12-2 - Information Item - Financial Report-Second Quarter FY 2021-22

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1 ORANGE COUNTY NORTH CAROLINA FINANCE and ADMINISTRATIVE SERVICES Gary Donaldson,CTP,Chief Financial Officer I gdonaidson@orangecountync.gov I PO Box 8181, Hillsborough, NC 27278 919.245.2453 MEMORANDUM To: Board of County Commissioners From: Gary Donaldson, Chief Financial Officer Date: February 17, 2022 Re: Financial Report- Second Quarter FY 2021-22 Please find below a summary of FY 2021-22 second quarter financial report for the General Fund, Enterprise Funds, Special Revenue Funds and the UNC-Charlotte Economic Update from Dr. John Connaughton available electronically. The notes at the end of the financial report beginning on page two provides variance explanations for revenues and expenditures.The variance compares the current fiscal year year-to-date results with the prior fiscal year. American Rescue Plan Act(ARPA) Update The Treasury Department released the Final Rule for permissible use of American Rescue Plan Act Recovery Funds. The final rule is effective April 1, 2022 but guidelines can be used retroactively to March 2021 when the funds were first authorized.The final rule provides much more clarity regarding eligibility of projects, loosens many of the administrative requirements from the interim rule, and broadens our ability to use funding for capital projects, cybersecurity, and broadband. The change that has the potential for the most benefit to Orange County is a rewrite of the "lost revenue" provision.Jurisdictions are now allowed to either take an allowance of up to$10 million of lost revenue (with the presumption that over the course of the pandemic jurisdictions will see some lost revenue up to that amount) or can choose to complete the official revenue loss calculation in order to claim more than $10 million. It is in Orange County's best interest to use the $10 million lost revenue allowance.The allowance up to $10 million may be used for general government services that may not be otherwise included in the existing eligibility categories but cannot be used for fund balance, debt service, or pension contributions. The Finance Department has submitted the first quarterly expenditure report to the Treasury Department as of January 31,2022 showing$1,764,816.53 spent between the periods of March 1, 2021— December 31, 2021. The National Association of Counties (NACo) provided a thorough summary of the U.S. Treasury ARPA Final Rules. County ARPA Compliance and Triangle J Council of Governments Collaboration Orange County has partnered with Triangle J Council of Governments to provide ARPA project coordination, reporting and compliance with the U.S. Treasury Final Rules. In addition, the Finance Department has worked with the County Attorney's Office and held webinars with all County departments to ensure all recommended projects submitted to the 1