Annual Audit Presentation to the Macon County Board of Commissioners (July 2024 to June 2025)

Bao Tao (Martin Starnes and Associates):

Good evening. My name is Bao Tao, and I’m from Martin Starnes and Associates. I will be presenting the fiscal year 2025 audit financial statements. The audit has been submitted and approved by the Local Government Commission. I will begin by going over some audit highlights. We issue an unmodified opinion. An unmodified opinion or clean opinion is issued when an auditor can state without reservation that the financial statements are fairly presented in all material respects in conformity with GAAP. [Editor's note: GAAP stands for Generally Accepted Accounting Principles]

There was an increase of $455,000 in the General Fund fund balance, or 0.8%. There was a decrease of $430,000 in the Solid Waste net position.

This slide shows the total fund balance. In the General Fund, the total fund balance increased by $455,000. The increase in fund balance over prior year is 0.8%. Total revenue exceeded expenditures by $11 million, but after other financing sources and uses, this left the General Fund with an increase in fund balance of $455,000.

This slide shows the fund balance position in the General Fund. The available fund balance is a calculation utilized as the basis for comparing you to other units and calculating your fund balance percentage. Nonspendable includes inventory in the amount of $12,000 prepaid $637,000, notes receivable $5,000, and leases $7,000. The increase in available fund balance from prior year is due to the increase in the total fund balance.

This slide shows the available fund balance: in 2024 it was 85.62% and in 2025 it was 95.89%.

This slide shows the General Fund summary. Revenue increased by 5%, about $3.4 million from prior year, increased mainly in restricted intergovernmental revenues and miscellaneous revenues. Expenditures decreased by 1.2%, about $737,000 from prior year, decreased mainly in transportation.

This slide shows the top three revenues in the General Fund. Total revenue is $70.9 million. The top three comprise $60.3 million or about 85% of total revenues. Top three revenue sources are ad valorem taxes at 51%, restricted intergovernmental at 14%, local option sales tax at 20%.

We’ll discuss the top three revenues in the next two slides.

Ad valorem tax revenue increased by $686,000 or 1.9% and it is comparable to prior year.

Restricted intergovernmental revenue increased by $1.3 million or 14.2%. The increase is due to receiving a two-year Medicaid cost settlement fund in fiscal 25.

Local option sales tax revenue increased by $24,000 or 0.2% and this is comparable to prior year.

This slide shows the top three expenditures in the General Fund. Total expenditures are $60 million. The top three comprise $43 million or 73% of total expenditures. Top three expenditures: Public safety at 33%, Human services at 20%, Education at 20%.

Public safety expenditures increased by $717,000 or 3.8% and this is comparable to prior year.

Human services expenditures decreased by $491,000 or 3.9% and is comparable to prior year.

Education expenditures increased by $392,000 or 3.4% and is comparable to prior year.

This slide shows the Enterprise Fund Solid Waste. GAAP net income decreased over prior year. Cash basis net income increased over prior year. Unrestricted net position decreased over prior year. Please note that cash basis net income does not include items such as depreciation, changes in post-closure costs and other post-employment benefits, but does include capital outlay and debt service payments.

Current year is higher than prior year due to increase in operating revenues. In the current year, GAAP net income decreased mainly due to increase in the landfill closure and post-closure care costs. This is related to the full accrual adjustment of the liability.

Cash flows from operations increased due to increase in revenues received. Unrestricted net position decreased due to increases in net investment in capital assets.

We tested four major programs that are shown above. There was the Medicaid finding 2025-001. There was a significant deficiency related to eligibility compliance requirement. Participant had moved out of the state and was not eligible to receive receive benefits. The other three programs reported were no findings.

This slide shows the performance indicators as discussed earlier. In the county’s General Fund, fund balance available including the debt service fund balance for fiscal 25 was 95.89%, which is above the minimum of 20% and the average of similar units of 39%. The county has a stable property tax collection percentage at 98.5%. The county did not have any negative performance indicator.

This concludes my audit presentation. Thank you for allowing us to present, are there any questions?

Chairman Josh Young’s response:

Thank you. Very well done.

Commissioner John Shearl:

We went from a tier 2 to a tier 3. What are the factors that changed that?

County Manager Warren Cabe:

Most of that has to do with your median income that the Department of Commerce calculates those tiers off of and then your general growth in your population. So that’s not necessarily related to the information that she has. It’s close, but it’s not directly related.

And Mr. Chairman, I’ll add a couple things to her presentation. Obviously we’re about a month later than normal for the audit process, but it took a while for the Local Government Commission. There were some issues that we had to work through back at the end of the fiscal year to go through the audit process. And then of course we had to send it to them, get it approved. So that’s the reason we’re about 30 days behind where we normally would be. That was on the front end of the process submitting the information, LGC telling us what to look for and go through the process.

My suggestion would be based on obviously this information be available on the web page, look at the information that’s in there. We could either have a special meeting or we could do it at a February meeting. At least have a basically a mid-year discussion on our budget and where we’re at and then kind of get our priorities set because we’re going to start the budget process in February for the upcoming fiscal year. So we need to have that conversation fairly early.

A couple of points based on information that she had there. You saw that the General Fund increased $455,000 and some change. That’s still a significant amount of money. That’s also a big difference from the $3 million or so that we did a year before. However, I’m also pretty pleased with that. That’s not an insignificant amount of money.

But you also need to remember that we’ve had several projects that we have paid for out of fund balance, including roughly a $10 million renovation/expansion to Highland School that came out of fund balance, $500,000-ish expenditure for the library renovation out there. So you’ve done a lot of work out of that fund balance, still managed to keep it on the positive side. We’re still not dipping. We’re still good on the dollar figure that’s there, still kept your tax rate the same and accomplished all that at the same time. So that’s a pretty significant achievement for the board. And financially it’s a very stable process that you’ve entertained there.

I’ll also address that you saw the deficiency on the Solid Waste Enterprise Fund. That partially answers part of the Carson question. But if you remember when we did the financing package for the new landfill cell, we had already expended a significant chunk of money on that cell on the stuff up front, $578,000 somewhere in there and some change, but we’d already expended out of that fund balance. So when that’s why you see that big decrease in there. But now next year when we come back, we will have reimbursed ourselves that money and that will allow us. That’s the money that we need to use to do the Carson Center. And then we’re going to talk about some grant opportunities there as well. So we were trying to make sure our cash flow was good on that, make sure our numbers look good. And we were, we had the financials to handle that before we got terribly deep in that project. But I will have some more information on that.

Chairman Josh Young:

You know, right after Covid, it seems like everything kind of spiked, you know, very, very quickly. And I’d almost like to see a chart, a trend, you know, from 10 years. Because every budget, you know, it’s based on prior year and they still keep climbing. You know, like once Covid got over with, didn’t go back to regular times, it just keeps elevating. And I wouldn’t mind to see the trend, you know, over the past five to eight years.

You know, can you provide that? Can you do that? I just think it’d be neat to kind of see. Well, not necessarily. Well, we’ll just get sales tax, you know, just revenues.

County Manager Warren Cabe:

Yeah. And I can talk, I mean we can talk about this mid-year view. But you know, part of that was the growth that you mentioned there, the tax base growth, the roughly 5% or whatever that number was there. So that helps partially with revenue. We mentioned that back in the budget process last year. So that’s where part of that is.

Our sales tax, if you look at last year, we were basically flat. Not great. But the good thing was we were flat because you had counties like Buncombe and Henderson and some of those other counties because of Helene, they dipped. They would have been tickled to death to be flat. So I still think that says a lot for us. And our trends are looking positive this year on our sales tax revenue. So I think we’re gonna recover very well from that. Which still says a lot about your economy, which goes into that tier ranking that you’re talking about.