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2015 Comprehensive Annual Financial Report
(CAFR UPDATE)
April 11, 2016
VISION STATEMENT
“BUILDING ON OUR LEGACY, ILLUMINATING INNOVATION,
and SUCCEDING BEYOND BORDERS”
Est. 1850
Prepared by:Edward A. Dion, County Auditor, CPA
and County Auditor’s StaffEl Paso County Courthouse Building800 East Overland Street, Room 406
El Paso, TX 79901www.epcounty.com
Items for Discussion:
1. External Audit Results
2. Entity-wide Financials (What’s Changed)
3. Entity-Wide Statement
4. FY 2015 GF Fund Balance Analysis
5. Revenue Estimate Variances–General Fund
6. Appropriation Variances-General Fund
7. Revenue Sources–General Fund
8. Expenditures – General Fund
9. Trends, Past and Future
10. Impacts for future years
3
External Auditor’s Opinion Letter
No Significant Audit Findings
Management Letter Comments
Purchasing – Prior issues resolved no current issues
Tax Office – Six month retention for records
County Auditor Office –
Investment policy to firms investing for County (repeat)
Investment pools not considered brokers (repeat)
Second review of cash reconciliations (repeat)
Documenting verification of budget amendment postings (1)
TCDRS census data errors (4)
Timeliness of payroll certifications for grants
4
GASB Pension Reporting in the Financial statements (Previously only in the Notes)
GASB 68/71
Requires balance sheet recognition of a liability for pension obligations (Net Pension Asset/Liability).
Changes in the Net Pension Asset/Liability from year-to-year are reported as pension expense on the income statement or as deferred outflows/inflows of resources and is recognized over a period of time, depending on the type of change.
Requires all pension plans to use the same formula to calculate the NPL, providing a consistent framework for comparing the financial status of different plans.
Provides a snapshot of a plan’s financial status as of a given date
5
GASB 67/68
Eliminates Annual Required Contribution (ARC). As a result, the County is encouraged to establish a formal funding policy separate from financial reporting calculations. (Component of Budget/Financial planning)
Employers who grant (COLAs) with a certain frequency are considered as granting COLAs that are repeating or 'substantively automatic' for purposes of GASB calculations. (Major NPL Factor)
Pursuant to State law, employers participating in the TCDRS system must pay 100% of their actuarially determined required contributions on an annual basis which TCDRS will continue to provide AND ADJUST based on a participant county’s direction.
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What GASB 67 and 68 don’t do:
Calculation and reporting of the NPL is not:
• Used to determine TCDRS employer contribution rates.
• Going to directly impact property tax rates.
TCDRS isn’t looking for employers to pay down the liability any differently than we do now but are encouraging Counties to develop their own funding plans.
Pension liability isn’t new to bond-rating agencies.
7
Net Position
Liabilities exceeded Assets by ($45.2)M
Total Net Position down by ($194.1)M or (2,394)%.
Attributed to implementing GASB 68.
8
Compared to FY2014
Assets and Deferred Outflows of Resources:
Assets = $482.9M $7.1M or 1.49%.
Deferred Outflows = $31.6M $31.4M
Liabilities and Deferred Inflows of Resources:
Liabilities = $559.5M $232.3M or 70.98%.
($233.8M relates to Net Pension Liability)
Deferred Inflows = $310.1K 100%(attributed to the refunding of bonds in 2015.)
9
Compared to FY2014
Net Position:
Total Net = ($45.2)M ($194.1)M or (130.39)%.
Investment in Capital Asset (net of Debt) = $56.1M
$32.1M or 133.77% (project completions)
Restricted Net Position = $86.1M ($30.1)M or (26.20)%.
• CP=$57.5M, SR=$27.9M, ET=$282K and DS=$441K
Unrestricted = ($187.5)M down from $8.2 mil in FY14
10
Compared to FY2014
Total Program & General Revenues
Total Revenue = $313.4M, $13.8M or 4.60%.
• Program Rev = a net $89.8M $1.8M or 2.05%.
(Charges for Services, Operating and Capital Grants and Contribution)
• General Rev = $223.6M $12M or 5.7%.
(Property Taxes, Other Taxes and Other Rev)
Total Expense = $316.6M $21.5M or 7.29%.
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Prior Period Adjustments = ($190.8)M
Governmental Activities = ($190.6)M
Business-Type Activities = ($151K)
Net Position = ($45.2)M
Governmental Activities = ($55.7)M, $138M in FY14
Business-Type Activities = $10.4M, $10.9M in FY14
12
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General Fund- Fund Balance
FY 2015 Beginning balance $50.9M
Revenues and Transfers-In
(Incr. $13.6 mil or 5.89%) $245.2M
Expenditures, Transfers-Out
(Increase $4.7 mil or 2.06%) ($235.2M)
Prior Period Adjustments ( $.1M)
(Net Change in Fund Balance) $10.1M
FY 2015 Ending balance $60.8M
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Total Fund Balance $60.8M, increase of $10M over FY2014.
Committed-Designated to balance the FY2016 budget is $14.4M, $2.3M less
than utilized in FY15 leaving an Unassigned Fund Balance of 45.2M resulting in
a 17.17% reserve ratio of Unassigned to the FY2016 GF Budget of $263.1M.
2009 2010 2011 2012 2013 2014 2015
Nonspendable $5 $13 $15 $10 $6 $10
Assigined $5,824 $11,521 $11,939 $14,142 $17,685 $15,602
Unassigned $26,764 $35,058 $38,318 $35,673 $33,221 $45,162
Reserved for Specific Purposes $1,280
Unreserved, Designated for Subsequent Year
Expenditures$15,751
Unreserved, Undesignated/(Shortfall) $15,319
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Am
ount
s in
Tho
usan
ds
Fiscal Years
Fund Balance Components-General Fund
15
Note: Actual revenues exceeded the 2015 Revenue Estimate of $236.3M by
$8.9M or approximately 3.75%.
Estimated Revenue Original % Orig. Est. Final
% Final
Est. % Alloc.
Taxes:
Property $147,589,503 62.45% $147,589,503 62.45% $147,814,567 60.29% $225,064 0.15% Sales $40,269,518 17.04% $40,269,518 17.04% $43,898,082 17.90% $3,628,564 9.01%
Bingo $52,000 0.02% $52,000 0.02% $55,906 0.02% $3,906 7.51%
Mixed beverage $2,050,000 0.87% $2,050,000 0.87% $2,286,402 0.93% $236,402 11.53%
Licenses and permits $243,000 0.10% $243,000 0.10% $257,051 0.10% $14,051 5.78%
Intergovernmental $4,742,992 2.01% $4,742,992 2.01% $4,831,890 1.97% $88,898 1.87%
Charges for services $33,671,446 14.25% $33,671,446 14.25% $36,570,447 14.92% $2,899,001 8.61%
Fines and forfeitures $4,590,000 1.94% $4,590,000 1.94% $5,084,639 2.07% $494,639 10.78%
Interest $100,000 0.04% $100,000 0.04% $112,312 0.05% $12,312 12.31%
Miscellaneous $2,021,500 0.86% $2,021,500 0.86% $3,236,953 1.32% $1,215,453 60.13%
Transfers in $993,075 0.42% $993,075 0.42% $1,038,256 0.42% $214,623 21.61%
Total revenues $236,323,034 100.00% $236,323,034 100.00% $245,186,505 100.00% $8,863,471 3.75%
Variance
as % of
Estimate
Estimate vs
Actual
Variances
FY2015 Budgeted Revenue Estimates
Actual
Revenues
16
• Favorable appropriation variances were experienced in all
functions of the County’s general fund.
• Overall favorable appropriation variances totaled $19.8M which
represents 7.76% of the adopted general fund budget with
carryover.
• Favorable Variances represent budgetary savings, cost reduction
and/or avoidance and continue to be a SIGNIFICANT contributing
FACTOR to stabilization of fund balance reserves.
Appropriations Original % Alloc. Final % Alloc. % Alloc.
Personnel 195,187,057 77.52% 194,980,836 77.22% 183,610,707 78.93% 11,370,129 4.47%
Operating 52,118,612 19.92% 52,145,362 20.13% 45,078,481 18.50% 7,066,881 2.78%
Capital 1,075,000 0.26% 1,221,075 0.32% 163,316 0.13% 1,057,759 0.42%
Transfers out 6,199,517 2.29% 6,232,913 2.32% 5,973,044 2.44% 259,869 0.10%
Total 254,580,186 100.00% 254,580,186 100.00% 234,825,548 100.00% 19,754,638 7.76%
Variance as % of
Approp.
Actual
Expenditures
FY2015 Budgeted Appropriations Budget/Actual
Variances
17
$194.98
$52.15
$1.22
$6.23
$254.58
$183.61
$45.08
$0.16
$5.97
$234.83
$11.37
$7.07
$1.06
$0.26
$19.75
$0 $50 $100 $150 $200 $250 $300
Personnel
Operating
Capital
Transfers out
Total Approp.
Variances Act. Expend Final Approp
GF Appropriations, Expenditures and Variances(Amounts in Millions)
18
Personnel, $11.37, 57.56%
Operating, $7.07, 35.77%
Capital, $1.06, 5.35%
Transfers out,
$0.26, 1.32%
General Fund Appropriation Variance $19.8Mil. Or 7.76% (Amounts in Millions)
19Taxes = Property $147.8M, Sales $43.9M, Other $2.3M
Tax Revenues, $194,054,957 , 79%
Licenses and Permits, $257,051 ,
0%
Intergovernmental , $4,831,890 ,
2%Charges for Services, $36,564,045 , 15%
Fines and Forfeitures,
$5,084,639 , 2%
Interest Earnings, $112,312 , 0%
Miscellaneous Revenues,
$3,236,953 , 1%
O ther Financing Sources, $1,038,256 ,
1%
General Fund Revenues
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General
Government,
$45,512,299 , 19%
Administration of
Justice,
$55,168,046 , 23%
Public Safety,
$115,463,147 , 49%
Health and
Welfare,
$8,489,940 , 4%Resource
Development,
$334,290 , 0%
Culture and
Recreation,
$3,639,275 , 2%
Public Works,
$58,174 , 0%
Capital Outlays,
$163,316 , 0%
Other Financing
Uses, $6,338,296 ,
3%
General Fund Expenditures
21
Note: Future deficits could arise if projected new cost increases are incurred without
identifying new funding sources.
$52 $40
$34 $34 $43
$49 $49 $43 $32 $32
$46 $50 $50 $51 $61 $64 $65 $60
$52 $39
$18 $27 $27 $19
$9 $10 $22 $21
$16 $5 $11 $11
$13
$17 $18 $15
$10
$16
$20 $25
$9
($13) ($11)$0 $2 $5
($1) ($6)($11)
$0 $14
$4 ($0)$1
$10 $3 $1 ($5)
($8) ($13)
($90)
($40)
$10
$60
$110
$160
$210
$260
$310
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mil
lio
ns
(Gen
era
l Fu
nd
On
ly)
Fiscal Years
County Auditor's Financial Forecast
As of February 29, 2016 (Unaudited)Note: Projections include uncertified non-tax revenues and known unfunded projected expenditure impacts due to new facilities in future years.
Estimated Fund Balance Reserve (DEFICIT)
Revenues
Expenditures
Budgets
Desig. Fund Bal. Required to Balance FUTURE BUDGETS
Estimated Net Change Revenue Over (Under) Expend.
Actively monitor economic impacts on revenuetrends and possible future negative/positivelegislative impacts. (Tax Caps/No C.O. Debt?)
Continually assess revenue enhancement tocollect current and past assessments.
Work with project managers to ensure timelyuse of existing bond proceeds for eligibleprojects.
Continue financial updates to Comm. Court(Goal of monthly revenue forecasting updates)
Continue implementation of ERP (Financial,Purchasing, Budget, HR and Payroll)
22
GASB 68 While the 2015 CAFR appears to show the County is
financially weaker, the financial reality is nothing haschanged.
Counties are encouraged to establish a formalfunding policy separate from financial reportingcalculations.
Incorporate a Fringe Benefits Funding Policy into theCounty’s Financial Policies.
Pursuant to State law, employers participating in thesystem must pay 100% of their actuarially determinedrequired contributions on an annual basis whichTCDRS will continue to provide and ADJUST at theparticipant county’s direction.
23
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