Dare commissioners give go-ahead on new bond issue; FY 2020 audit presented
On Jan. 21, 2021, Dare County expects to sell Series 2021A limited obligation bonds.
The bond proceeds are expected to be $32,422,039.
The sale date was assigned by the state’s Local Government Commission.
The bonds will finance the new College of The Albemarle academic building, the new animal shelter, an expansion of the county’s Health and Human Services complex, a new roof at Manteo High School, purchases of property in Manteo and Buxton and Emergency Medical Services equipment.
A month before the sale, Dare County’s Board of Commissioners adopted an approving resolution to secure the bond sale along with an amendment to the capital project ordinance.
The board had previously agreed to finance the projects, property acquisitions and equipment.
As collateral for the bond, the resolution pledges the Department of Health and Human Services buildings and expansion and a part of the parcel.
At the same Dec. 21, 2020 meeting, Dare commissioners received the audit for the fiscal year ending June 30, 2020.
Auditor Bob Taylor with Potter and Company explained various items in the audit by phone followed by Dare finance director David Clawson with a presentation. He called it “a successful financial year” in light of the coronavirus pandemic.
The audit opinion is unmodified on financial statements, which are fairly presented with no exceptions.
The auditor is required to audit major federal and state grants with the threshold at $750,000. Federal grants tested were Medicaid, FEMA disaster relief for Hurricane Dorian and CARES Act funds. These grants totaled $7.67 million. State grants tested were Medicaid, state disaster relief and shallow draft navigation channel dredging, all totaled $1.96 million. Since 1996, no faults have been found in the single audit grant process and no faults were found in this audit.
No recommendations were included in the auditor’s management letter.
One material weakness, essentially a timing issue, was noted. The Capital Projects Fund had a deficit of $1,535,218 at year end. Actual expenditures for the several capital projects to be financed with the Series 2021A bonds were incurred.
The bond sale was originally scheduled for fiscal year 2020 and the proceeds would have covered the deficit. The plans for the College of The Albemarle project were delayed. Instead of two bond issues, the decision was made to go with one bond issue, pushing the financing for all projects to 2021.
As of Jan. 21, 2021, the finding will be cured as required.
At the end of the current fiscal year, unassigned fund balance in the General Fund was $27,926,254 or 26.94% of unconsolidated General Fund revenues for the current fiscal year, exceeding the county’s policy of 21 percent of the operating budget. Taylor praised this development.
The General Fund expenditures ended the year under budget by 7.59% or $7.55 million; revenues were under budget by $2.79 million. When the county shut down in March, county manager Robert L. Outten told department heads to fill vacant positions only if essential and spend money only if an essential expenditure, reported Clawson. Generally, the county’s expenditures run under budget. The five-year average is 4.53% and the 10-year average is 4.75%.
The audit covers all the county’s special funds as well. At year end, the Water Fund posted a loss at $638,866. Usage from March 1 to June 30 was down 3.12%. The revenue bond coverage remains in a good position at 2.01%; required coverage is 1.2%. Clawson said the Water Fund from March to November now has a positive balance.
The audit concludes with a statistical section with 10 years of data on the county’s net position, fund balances, assessed valuation, tax rates, levies and collections, top ten taxpayers, debt, debt margin and revenue bonds, demographic and economic data, principal employers, employees by function and operating indicators.
Clawson showed a dramatic chart with a steep declining line, illustrating the percentage of debt service to expenditures. The figure represents what part of the budget has to be paid. As of June 30, 2020, the percentage of the county is 14%, two percentage points below rating agency standard 16%, said Clawson. With the new bond issue, the rate will be 15.5%.
Clawson concluded his remarks by looking ahead. He said the budget for 2021 is the easy one; 2022 is the hard one.
The county generally feels the effect of a recession about a year late and comes out about a year later than the rest of the country. Outten said that Dare followed the rest of the country in economic downturn. “We’re struggling with how to predict” the effect of COVID-19.
To the commissioners, Outten said “that’s a really good financial statement as you just saw. We’re really proud of it.” He praised the finance team and department heads for managing budgets and maintaining services.