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Audit shows $14.7 million cash in county coffers

Staff writer

Marion County holds millions of dollars in unencumbered cash, the county’s auditor reported Monday, confirming an issue raised in recent budget discussions.

The county’s annual audit identified $14.7 million in unencumbered cash at the end of 2016. Accountant Scot Loyd of Swindoll, Janzen, Hawk & Loyd presented the report, which also identified several deficiencies, to commissioners.

The audit confirms concerns about large unencumbered cash balances raised at the Aug. 21 budget hearing by Randy Collett and Anthony Roy, Marion and Hillsboro economic development directors.

The pair questioned raising taxes while holding large cash balances, blaming higher taxes for struggling economic development. Their look through the county budget identified just under $16 million in unencumbered cash reserves, what they said was two to four times what would be typical.

At the time, no commissioners or county officials challenged their statistics. County clerk Tina Spencer has since said she will prepare a sheet that addresses cash reserves for the next meeting. On Monday she said her report is mostly finished, but is still incomplete.

The audit report shows a cash amount below the approximately $15.7 million estimated by the economic development directors. The county held $12.4 million in unencumbered cash at the start of 2016 and $14.7 million at the end of the year.

Based off the 2016 growth rate, the county could have had $16.2 million at the start of September, more than estimated by Collett and Roy.

After the pair identified the cash reserves, Lincolnville fire chief Lester Kaiser approached commissioners, suggesting the cash should be used to purchase radios for rural fire districts and other emergency agencies.

The radio project, which includes fire districts and other emergency agencies, is estimated to cost $700,000. The fire districts would not bear the entire cost of the project.

The audit shows fire districts brought in $362,000 in 2016 and spent $340,000 of it. Their ending cash balance was $108,000, well short of the cost for the radio project.

The largest amounts of unencumbered cash are in capital improvement, $5.1 million; road and bridge, $3 million; general, $2 million; jail bond, $1.6 million; and transfer station, $738,000.

Commissioners have said some of the money has been set aside for larger expenses.

Money in the jail fund can pay off the bonds early, but the bonds prohibit early payment until the end of 2018. The deteriorating transfer station has been targeted by commissioners for renovations or new construction. Capital improvement and road and bridge funds are needed for the upcoming 330th Rd. project, and general fund surplus cash is needed to ensure the county meets pay schedules.

Fiscal deficiencies

The audit identified several control deficiencies, which Loyd said ranked among the least serious of three possible categories.

The county does not have a written policies and procedure manual for legal, accounting, and security issues. This was a recommendation the previous year, but it was not completed in 2016.

The recommended manual would include identity theft policy, anti-fraud policies, purchasing procedures, data storage and back-up procedures, data access policies, revenue recording procedures, long-term debt policies, and journal entry procedures.

In warning commissioners about fraud, Loyd specifically mentioned overtime fraud. Overtime pay has been a contentious countywide issue, especially in the EMS department.

The audit report said the county has not always removed former employees from the computer system by deleting their password access.

Variances in the bond and interest fund of $52 and the special road and bridge fund of $15,827 of expenditures over budget would have been violations had the accounts not been closed.

The register of deeds technology fund exceeded expenditures by $3,816, resulting in a budget violation.

The county had cash in 11 places at the time of the audit. Six were county banks: $5.5 million at Marion National, $13.2 million at Central National, $3,600 at Vintage State, $256,000 at Emprise, $21,000 at Hillsboro State, and $4 million at Tampa State.

Overall, the county had $28.7 million in cash at the end of 2016, but $14 million of it was earmarked for other purposes.

The audit said the county’s financial statements do not conform with generally accepted accounting principles, but the county does follow the Kansas Municipal Audit and Accounting Guide.

Last modified Sept. 20, 2017

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