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i i I ORANGE COUNTY ABC BOARD—AGENDA FORM j I Meeting Date: May 20,2025 Agenda Item #6 Regular Session X Closed Session i i I Adiustments GASB 87 requires the capitalization of leases while GASB 74/75 requires the financial recording of postemployment/retiree benefits and the Board's portion of the state retirement program. Rent/lease amortization calculations are provided by DMJPS (our auditors). GASB 74/75 entries are calculated annually by actuaries while assets/liabilities related to the state retirement system are provided by the state in August. All these entries are estimated for the purpose of this draft budget. Pakroll, i In response to inflation and the cost of living in Orange County, payroll expenses have increased significantly from the 2022 base year,up$990,364, 31.34%. While relative sales volumes in FY 2022 and FY 2026 provide a relevant benchmark,the increase in payroll adversely affects the "bottom line"when comparing the two years. The overall increase to payroll from FY 2025 is a modest 4.30%. It is anticipated that this year's change to Cigna Healthcare will result in a moderate increase in premium at year's end. For FY 2026,the Board's "matching"portion of the state retirement system is increasing to 14.39%, up from 13.64%. Operational Expenses: Projected operational expenses for FY 2026 ($1,638,865) are up 13.80%from the base year (2022), due primarily to increases in business insurance(56.50%),service agreements(60.24%)and utilities (34.09%). However, the FY 2026 estimate is just 0,36% over the current year (2025) and comparable to the levels over the past three years. I Depreciation While the depreciation of assets is recorded as a normal business outlay, per the NC ABC Commission, it is not considered as a budget line items as it is a "non-cash" expense. Estimated depreciation "expenses" for FY 2026 are presented as a "below the line" item, however, for the j benefit of the Board's consideration. li I I I I I Page 2 of 7 pages