Oneida County beats budget expectations, adds to reserves

Oneida County has come home with a good report card to show taxpayers for its 2024 finances, with revenues outpacing expenses and the county adding nearly $2 million to its general fund reserves.

Finance director Tina Smigielski and Anthony Cervini of Sikich LLP, the county’s independent accounting firm, delivered the 2024 finance report at Tuesday’s county board of supervisors meeting. Except for one issue with internal control over financial reporting found in the solid waste fund, the annual financial report found the county in good financial shape.

Not that challenges don’t exist. The county’s new Human Service Department posted a deficit of $825,753 in 2024, driven by a surge in expensive youth out-of-home placements that are beyond the department’s ability to control. The numbers are even higher this year, as is the expected deficit.

That might be a high mountain to climb, but the finance report offered supervisors some solace that the county is well-equipped for the uphill trek.

First and foremost, Smigielski advised supervisors that it was a clean and unmodified report opinion, which Cervini added was the highest assurance auditors can provide. It means that the county’s financial statements fairly and accurately depict its position, conform with generally accepted accounting principles, and contain no material misrepresentations. 

As for the actual numbers, total revenues for 2024, including net transfers, came in at $62.2 million, Smigielski told supervisors, compared to $55.7 million in expenses. 

“This does reflect a decrease of 1 percent revenues, which is expected as Covid-era related revenues were tapering off,” Smigielski said. “But expenses decreased by 5 percent, so that also is good news.”

And even more good news: “The total cost of county programs was 89 percent of our revenues,” she said. “So in other words, for every dollar we collected in revenues, we only spent 89 cents.”

That performance strengthened the county’s net position for the future, Smigielski said.

“We did have a favorable variance to our budget with actual revenues in the general fund finishing above the budget, actual expenditures finishing below the budget,” she said. “So after transfers out for capital improvement projects, we were able to add $1.8 million at year’s end to general fund reserves.”

Specifically, according to the report, general fund revenues totaled $34.5 million, approximately $2.7 million higher than budgeted, driven by higher-than-anticipated revenues in fines and fees, licenses and permits, charges for services, and investment income. Taxes finished close to what was budgeted.

Expenditures finished at $29.2 million, $4.1 million below projections, the report stated. Wages and benefits accounted for 62 percent of total general fund expenses and finished $721,000 under the budgeted plan, with most of the windfall attributable to vacancies and lower-than-expected fringe benefit costs. 

“Transfers into the general fund at year’s end included excess tax levy from the public health funds,” the report stated. “Due to these positive variances, the county did not need to tap contingency to fund general fund operations for 2024.”

Subtracting expenses from revenues left a pre-transfer surplus of $5.3 million, the report stated. After accounting for transfers and fiscal adjustments, the county added $1.8 million to general fund reserves.

The bottom line was, as the finance director tallied it up, at the end of 2024, the county’s general fund reserves were $27.9 million. Of that, $2.3 million is non-spendable, reserved for such things as accounts payable and other obligations. Another $4.9 million is already assigned for use — continuing appropriations for planned projects or continuing expenditures, Smigielski reported.

“Another $10.8 million is held in our rainy day fund, and that leaves $9.9 million at the end of 2024 as unrestricted general fund,” she said.

Net position

The county’s 2024 operations resulted in a net position increase of $6.5 million, bringing the total net position to $100.9 million. In a letter to the board accompanying the report, Smigielski broke that number down: $67 million is invested in capital assets (net of depreciation); $2.3 million is restricted for specific purposes; and $31.6 million, or 11 percent of total net position, is unrestricted assets.

Of the total revenues of $62.2 million in revenues for the year, including net transfers, taxes accounted for 43 percent; charges for services, 28 percent; grants and contributions, 17 percent; and the remaining 12 percent consisted of intergovernmental, investment income, and other revenues, Smigielski wrote.

She broke down the expense side of the ledger, too. 

“Expenses totaled $55.7 million for 2024,” she wrote. “Public safety accounted for 30 percent of spending; health and human services, 23 percent; general government, 19 percent; highway, 10 percent; and categories including conservation, development, recreation, and other accounted for the remaining 18 percent.”

During the year, the report stated, governmental activities revenues were $52.8 million, and expenses totaled $47.6 million, resulting in an increase in net position of $5.2 million, after transfers. The county also generates certain business-type revenues, such as those from the solid waste department, which totaled $9.3 million, with expenses of $8.1 million, resulting in a net increase in position of $1.2 million.

For business-type activities, the report stated, the major funds are the highway fund and the solid waste fund.

“Highway fund reflects costs which are billed back to other governmental bodies and county departments include snow plowing, road resurfacing, mowing, traffic control, and other related functions,” the report stated.

The solid waste fund accounts for a fee-based transfer station for residential and commercial municipal solid waste, the construction of a demolition site, and other related services.

“The business-type activities assets and deferred outflows had a combined increase of $1.1 million to a total of $14.3 million,” the report stated. “Most significantly, net capital assets went up $1.2 million for a total of $9.2 million at year’s end as replacement of facilities and equipment kept pace or exceeded depreciation expense for the year.”

In addition, the report continued, total business-type activities liabilities and deferred outflows declined by -11 percent to a total of $3.4 million. 

“Non-current liabilities, and deferred inflows for pension and other post-retirement benefits all declined, to improved positions, for the year,” the report stated. “Year-end net position is $10.9 million, with $1.7 million of that total being unrestricted.”

As for business-type activities operating revenues and expenses, the audit reported that those were essentially break-even. 

“Non-operating revenues contributed to a positive change in net position for the year of $1.4 million,” the report stated. “The business-type net position at year’s end is $10.9 million.”

For governmental activities, the report explained, the major funds are the general fund and the social services fund. 

“The general fund accounts for the majority of governmental activities and the services that are provided by the government, making up more than 77 percent of total governmental assets,” the report stated. “The activities of supporting the county’s courts, public safety, facilities, forests and parks, as well as general administration, are reported in the general fund. The activities accounted for in the social services fund include counseling, advocacy, education, and safety services primarily recovered via grant funds.”

For 2024, the report continued, governmental activities assets and deferred outflows had a combined increase of 2 percent, ending the year at $140 million. 

“Current assets increased by 13 percent, attributed to high cash balances and amounts due from other governmental agencies at year-end,” the report stated. “Liabilities and deferred inflows declined by a combined -4 percent to a year-end balance of $50 million. While accrued wages and accounts payable grew compared to the prior year, the decrease in non-current liabilities and deferred inflows offset those upticks.”

Net capital assets increased by 3 percent to $57.7 million as ARPA-funded projects were completed, and net position restricted for specific purposes declined slightly, the report observed.

“Unrestricted net position ended the year higher than the prior year by 14 percent, a total ending value of $30 million,” the report stated. “Total net position for the year ended at $90 million.”

That close to perfect

The otherwise clean report did reveal one hiccup: a significant deficiency in internal control over financial reporting. The auditors said the county recorded two error corrections in the Solid Waste Fund related to prior periods.

“The county identified a capital asset in the Solid Waste Department that was expensed in prior periods, but should have been recorded as a capital asset,” the report stated. “Additionally, the county identified revenue related to prior periods in the Solid Waste Department that should have been recorded as accounts receivable. Both items were recorded as error corrections in the current period.”

The preparation and review of accurate financial reporting information by staff with expertise in financial reporting is an internal control intended to prevent, detect, and correct a potential omission or misstatement in the financial statements or notes, the report asserted, but Oneida County’s internal controls over financial reporting did not identify those errors in prior periods.

“Without our involvement, Oneida County may not be able to completely prepare an annual financial report in accordance with accounting principles generally accepted in the United States of America,” the report stated. “We recommend the county should establish and implement procedures to record capital assets under the county capitalization policy in the period they are purchased. Additionally, we recommend the county implement procedures to identify and reconcile accounts receivable as of year end.”

While significant, the findings did not undermine the overall positive conclusion of the report.

However, if the report had one cloud hanging over its sunny skies, it is the challenge facing the county as out-of-home placements increase, which incur skyrocketing costs in the Human Service Department.

The department (then the social services and ADRC) ended 2024 with an $825,753 deficit, requiring a transfer from the general fund to break even. The shortfall was almost entirely driven by escalating costs for out-of-home care for children, particularly placements in residential care facilities.

Finally, Oneida County continues to stand out in one important respect. It carries no outstanding general obligation debt. State law allows counties to borrow up to 5 percent of their equalized value. In Oneida County’s case, that’s $550 million. But, as of the end of last year, the county owed nothing.

In his brief remarks, Cervini highlighted another bright spot: the county’s recent upgrade to a new Enterprise Resource Planning (ERP) system, a software system that helps organizations manage and integrate core functions.

“I know the ERP system change over the last several years has been a very heavy lift from a project standpoint,” Cervini said. “Tina [Smigielski] has been obviously heavily involved in overseeing and leading that project from the finance standpoint there. But we have seen the improvement in terms of the information coming out of the system there and the ability to look into that information there as well. So that was definitely a worthwhile and necessary upgrade from what we can tell.”

Looking beyond 2025, the report observed that the county has already budgeted transfers from the unassigned general fund in 2025 for “pay-go” capital projects and for operating support. Even after those transfers, the report stated, reserves will remain above the threshold of three months’ worth of general fund expenses — the benchmark for rainy day reserves.

But the report reminded county supervisors that levy limits remain in place and exceeding them means incurring penalties, including reductions in state shared revenue. As such, the report noted that the county continues to seek alternative revenue sources, including sales tax, timber sales, and grants.

“Just want to again commend Tina and her team as well as the board for supporting the infrastructure needed,” Cervini told the board. “You have a great team here.”

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.