Lucas County agencies hold cash as others struggle

11/8/2010

Money is tight.

That's the word coming from Lucas County officials these days.

But as county government departments and agencies scramble to trim expenses and juggle declines in revenues, some entities are sitting on far larger cash cushions than others.

At least two county agencies - Children Services and the Board of Developmental Disabilities - began the year with surplus cash equal to a third or more of their annual budgets.

Those agencies, which receive a large chunk of their funding from property taxes, are on track to maintain similar surpluses through the end of this year.

Also, some departments - most notably the Lucas County Recorder's Office - have money stashed away in special accounts.

"I think there's been poor budgeting when you really start to take a look at these various funds and surpluses, because we're not spreading resources throughout county government as we should," Commissioner Ben Konop said recently.

The commissioner, who has been a vocal critic of relentless county budget cuts and layoffs, said surplus funds should be put to use instead of sitting in accounts. He also called on county officials to consider cutting certain taxes, fees, and levies to bring them into balance with expenditures. He said that could also help persuade voters to support tax increases for schools in Lucas County.

Other county officials maintain that the current reserves are simply sound financial policy and act as insurance against revenue shortfalls.

How much of a reserve is enough, however, depends on who is asked. Heads of agencies or departments that have large fund surpluses say the money is needed as a shield from funding cuts.

They also say the money helps them prepare for future needs and emergencies.

Dean Sparks, executive director of Lucas County Children Services, said the agency's reserves allow it to cope with increasing costs, even though income from its two levies remains flat. He said the surplus funds also provide a cushion against state and federal cuts.

In addition, Mr. Sparks said about $2 million of the surplus funds was slated for a building project that did not go ahead because additional money from the county failed to materialize. He said the agency also has saved money over the last two years by leaving 30 vacant positions unfilled.

Children Services had a surplus of nearly $20 million in its account as of Oct. 31. That amount is just less than half its 2010 budget of $44.2 million. Mr. Sparks said the board decided several years ago to maintain the equivalent of six months of its budget as a reserve.

"We think it's reasonable, we think it's responsible," the director said. "We can't ever be in the situation where we can't protect a child because we don't have the money to do it."

John Trunk, superintendent of the Lucas County Board of Developmental Disabilities, seconded Mr. Sparks' explanation of needing reserves to make up for falling revenue from local, state, and federal sources. He said the board's replacement levy, which voters passed in 2008, has generated additional funds for the agency, but not as much as expected because property values have declined.

The agency had $26.7 million left over at the end of 2009, more than a third of its budget.

The superintendent said the board has plans to spend much of the extra cash to meet an ever-increasing demand for services. That comes from people with autism and also from a growing list of disabled Baby Boomers whose parents can no longer take care of them, he said. There are currently 200 such people on the agency's waiting list, he said.

"We know that that's the crisis potentially waiting to happen," Mr. Trunk said. "We're the safety net. In fact, we're the only safety net."

He added that, because disabled people tend to need long-term help, the disabilities board must ensure it can meet the ongoing needs of people on its books while adding clients.

"That's the challenge we have. When an individual receives those residential services, we're basically committing to those services for life," Mr. Trunk stated. "That's in effect what really starts eating up that fund balance."

So far, however, the fund balance has been anything but eaten up. In fact, it's more than doubled over the last seven years, from $11.2 million in 2002 to the $26.7 million at the end of 2009.

Some county agencies take a different approach to reserve funds, either as a result of philosophy or out of necessity.

Lucas County Job and Family Services, for example, had just $1 million left over in its account at the end of last year, despite a budget of nearly $70 million.

Executive Director Deb Ortiz-Flores, said that's because the agency depends on reimbursements from the state and generally can claim only money it has actually spent. She said she would like to have more money in reserve to be better prepared for potential funding cuts, emergencies, or needed equipment upgrades.

"It is difficult to operate on the system we have," Ms. Ortiz-Flores said. "I would imagine people with reserves can do more long-term strategic planning."

David Schlaudecker, interim director of the Mental Health and Recovery Services Board, said his organization has decided to allow reserves to fall to a minimum of $3.5 million by 2012, despite anticipated cuts in state and federal funding. The agency had a surplus of $3.6 million at the end of 2009, a fraction of its $61 million budget.

"We keep our reserves by design very low and try and put every penny we can into providing service," Mr. Schlaudecker said. "In my view, there's no reason to have a huge rainy day fund when we're in the rainy day."

The recorder's office and dog warden's office are two other county entities with large surplus funds relative to their budgets. As of Oct. 31, the dog warden's "dog and kennel" fund had a $1.04 million cash balance, the equivalent of nearly two-thirds of its 2010 budget. The funds come from dog licenses and other related fees.

Since The Blade revealed the surplus this year, county Dog Warden Julie Lyle has pledged to spend some of that money on a new adoption area at the dog pound.

She also has put forward plans to install a new computer system at the pound and an on-site veterinary clinic.

Meanwhile, the recorder's office has $1.1 million sitting in an "equipment fund." Money in the fund comes from a portion of the fees paid to the office for recording of documents. That amount, which has remained fairly constant over the past eight years, is more than the recorder's 2010 budget of $757,000.

County Recorder Jeanine Perry, whose department has 14 employees, said the fund is needed to cover the cost of equipment upgrades over the next five years. In a five-year plan that has yet to be approved by commissioners, Ms. Perry recommended spending $189,550 to replace printers, computer hardware and software, and a surveillance system. An additional $700,000 would be spent on "consultants," according to the plan.

"Our office is very dependent on technology and technological changes, and it's expensive and we're prepared to make the changes when they're needed," Ms. Perry said. "In my judgment, it's money that's needed so that we're not caught unprepared."

But Commissioner Konop said the equipment account is vastly overfunded when compared to other counties. He cited money held in the recorder equipment funds in counties such as Wood, which has $196,000, and Franklin, which has $75,000.

"We have 10 times, sometimes 20 times more than comparable counties," Mr. Konop said. "I think it's highly inappropriate to have this much sitting in a reserve fund."

Mr. Konop also has questioned the amount of money held in other county funds.

Financial records show that altogether Lucas County had nearly $200 million in leftover money at the end of 2009.

That was dispersed throughout dozens of funds, including those for children's services, the developmental disabilities board, the recorder's office, and the county's general fund. Some of the money also comes from the state and federal government and from private grants.

However, nearly all of those funds are for specific purposes, and many include money that has already been committed to ongoing or future projects and expenditures, county officials said.

The exception is the county's capital improvements project fund, which as of last month held $15.5 million.

County Administrator Peter Ujvagi said the fund is supposed to hold reserves amounting to at least 8 percent of the general fund budget, which under the current budget would amount to around $10.6 million.

Mr. Ujvagi said the amount of reserves in the fund is currently below that, but as of Friday county officials could not provide an exact amount.

The county also has a general fund reserve of $13.4 million - about 10 percent of its $132 million budget. That's considerably lower than the $29 million held in general fund reserves in 2007.

Mr. Ujvagi and other county officials say the reserve is essential to ensuring the county has enough money to pay bills when it is awaiting tax revenue. They say the reserves also allow the county to maintain a good bond rating, which keeps future interest payments down.

"This is good fiscal management. To plan ahead, to make the right financial decisions," Mr. Ujvagi said. "Clearly our bond rating reflects that."

For Mr. Konop, county authorities need to reconsider some of the taxes, fees, and levies that have led to large surpluses.

He pointed to the recent decision by the Wood County Department of Job and Family Services not to collect its 1.3-mill levy next year because of fewer children requiring foster care.

That idea could be a hard sell to Mr. Sparks and Mr. Trunk, who both insisted their current levies are essential to helping them meet the community's needs over the long term. Mr. Sparks said the Children Services Board already reduced the amount of its levy requests in 2001 and 2003 and plans to ask for a renewal of those reduced levies when the current cycle runs out.

As for the county recorder's office, Ms. Perry has already told budget officials she will not be needing the $4 portion of recording fees for the equipment fund next year. Instead, that money will remain in the general fund.

Contact Claudia Boyd-Barrett at:

cbarrett@theblade.com

or 419-724-6272.