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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

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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

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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

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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.

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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.

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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.)

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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

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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

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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

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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

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• 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

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$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)

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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

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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

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(Gen

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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)

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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.

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