THIS WEEK’S TOP STORIES
Georgetown County: Officials unaware of audit’s criticism
By Jason Lesley
Two county officials were perplexed at being singled out in the county’s annual audit and listed as “significant deficiencies.”
Neither County Treasurer Loretta Washington-Cooper nor Master in Equity Joe Crosby were aware they had been criticized by accountants from Baird and Co. in the annual Georgetown County audit presented to County Council last week.
Auditors said the county treasurer’s property tax bank account had not been accurately reconciled to the county’s general ledger in a timely manner. They suggested establishing policies to accurately reconcile each county bank account.
Washington-Cooper, who was unopposed for re-election last year, wondered about the auditors’ definition of timely. “I can assure you my finance department met with them, and everything was checked off. Nothing was out of the ordinary. Every deposit is checked on the daily record.”
Washington-Cooper said she could only account for the treasurer’s side, and this appears to be a “combination of many things.”
Auditors also said the master in equity, a state appointee who works within the Circuit Court system but is paid by the county, makes irregular payments to the county of fees and costs received and recovered. Adequate supporting documentation is not being provided with each payment. County Council recently adopted policies to rectify the problem, and they were passed along, according to the audit.
“They wanted more detail,” Crosby said. “We’ve addressed that.”
In other areas, auditors gave Georgetown County high marks.
“The county is in excellent financial condition, as good as any in the South,” Butch Whiddon of Baird and Co. said.
Whiddon said the county had a “very strong position” in the general fund, and its $10 million in cash deposits provide 172 days of operating revenue.
Financial highlights include:
• The county’s total assets exceeded liabilities by approximately $120.3 million at the close of the last fiscal year. The largest portion of total net assets is the investment in land, land improvements, buildings, machinery and equipment, vehicles, furniture and fixtures.
• The county increased its net investment in capital assets by roughly $16.7 million during the fiscal year that ended June 30, bringing the total book value of capital assets to approximately $130.5 million.
• Revenues of the county totaled approximately $66.1 million, and expenses amounted to approximately $60.5 million, resulting in an increase of net assets of $5.6 million or 4.9 percent for the fiscal year.
• Unrestricted net assets totaled approximately $21.9 million at year end.
• The county’s debt decreased by approximately $1.2 million, bringing the total outstanding debt at year end to approximately $73.3 million. The audit pointed out that a county can issue general obligation debt without a referendum up to 8 percent of taxable assessed values on property within its limits. As of June 30, Georgetown County was eligible to issue an additional $30.6 million in general obligation debt without referendum.
County Council Member Austin Beard asked Whiddon to compare Georgetown County’s debt to others. “I don’t think you are overboard with debt,” the accountant said, “though you’ve got a lot. You are in a very good financial position to handle the debt.”
Whiddon said this was actually a good time to borrow money because of low interest rates — as long as it was prudent.
In October 2011, the county issued $11.14 million in general obligation refunding bonds with interest rates ranging from 2 to 4 percent in order to retire $11.05 million in bonds with interest rates ranging from 4 to 5 percent. Proceeds were placed into an irrevocable trust to provide for future debt service on bonds issued in 2003. Savings on interest over the next 12 years was estimated at $1.2 million.
Whiddon said the county was not exposed to an untenable amount of liability from its obligation to provide health-care benefits to 79 retirees and 15 spouses of retirees. Most retirees, covered spouses and beneficiaries can continue health and dental coverage for life under the county’s plan, according to the audit. The county changed its rules for employees hired after July 1, 2005. Their health insurance benefits end once they become eligible for Medicare. The county covers 651 people, including its retirees, under the South Carolina health insurance plan.
Total general fund revenues fell $33,000 under budget estimates after considering proceeds from the sale of surplus county assets, according to the audit. Areas falling under budget estimates and the approximate amounts include:
• Property taxes, $127,000
• Master in Equity fees, $100,000
• Investment earnings, $127,000
• Election reimbursement (from state) $104,000
Areas exceeding budget estimates and the approximate amounts include:
• Estate fees, $57,000
• Building permit fees, $47,000
• Cable franchise fees, $209,000
Total expenditures incurred were $595,000 less that money appropriated. Variances resulted from three primary areas:
• Savings in personnel costs resulting from temporary vacancies and delays in filling positions, $139,000
• Unused contingency allowances as a result of a “very concerted effort by employees at all levels to conserve, save and perform more efficiently,” $157,000
• Small amounts of savings when added up resulted in significant amounts. “These kinds of variances,” the audit said, “are a consequence of budgetary controls that are designed to ensure that expenditures do not exceed budget appropriations and the large volume of individual line-items reported to the General Fund.”
Auditors said they anticipate minor improvement for revenue projections next year.
“Recent trends indicate that the key revenue streams associated with housing market problems and the general recessionary economy that has gripped our nation in recent years have begun to make a turn in the right direction. During each of the last two years we realized moderately significant increases in building permits and relatively strong growth in accommodations and hospitality fees generated from the tourism industry in Georgetown County,” the audit said.
Auditors said two sources of revenue were projected with great caution: local government fund distributions from the state and interest earnings from invested cash balances on hand. Auditors estimate a $55,000 shortfall in state revenue with hopes that legislators will restore funding to previous levels as the economy improves. The 2013 county budget was prepared with the expectation that earnings rates will remain historically low. “On a positive note,” the audit said, “interest earnings can only improve in years to come.”
The audit said the county took “bold cost-cutting measures” several years ago to eliminate approximately 23 full-time positions, cost of living and merit pay adjustments and a 3 percent across-the-board wage reduction for all employees. “There have been no cost of living or merit pay adjustments since fiscal year 2009,” the audit said. However, County Council authorized a one-time pay supplement of 3 percent of annual salary to employees, as it did in 2012, with approximately $460,000 from an unassigned fund balance. The only additional personnel authorized were those needed to maintain new regional recreation parks.
The county’s fund balance remains strong, the audit said. At year-end, amounts available in the general fund for future appropriations are approximately $9.3 million, a decrease of $600,000 from the prior year. County Council has adopted a policy requiring a minimum of $8 million of unassigned fund balance in the general fund to be maintained as a reserve.
The audit outlined significant segments of the capital improvement plan scheduled for the upcoming year. They include:
• Completion of eight recreational parks
• Completion of building expansion for the emergency operations center and 911 office • Completion of remodeling of the old County Courthouse facility allowing alternative utilization by county staff
• Beginning of construction of a new Waccamaw Neck Library
• Beginning of construction of a new Murrells Inlet Community Center
In addition to the capital improvement plan construction, the county plans additional stormwater improvements. The first project is scheduled to begin in Hagley Estates in February.