Fund balance, pensions highlight county financial report

Fund balance, pensions highlight county financial report

Allegheny County’s 2018 comprehensive annual financial report (CAFR) has been released. The CAFR is prepared by the County Controller and chronicles the county’s annual fiscal activities.

The county’s general fund ended the year with an $88.4 million fund balance. During the year the county collected $778.1 million in revenues.  Property taxes raised $304.9 million (39 percent) and the county’s share of the sales tax raised $51.4 million (7 percent) of total revenues.

General fund expenditures were $758.3 million, resulting in a general fund excess of $25 million. The county’s net transfer out of the general fund to other funds (to match state funding for 911 emergency services, child support and other human services functions) was $14.8 million, leaving a net change in fund balance of $4.9 million.

Of the year end fund balance $50.5 million is unassigned (not restricted, committed or assigned for some specific purpose). The controller’s transmittal letter notes “financial experts and rating agencies recommend governments should maintain a fund balance of at least 5.0% of operating revenues. The General Fund’s unassigned portion of the fund balance of $50.5 million represents 6.5% of General Fund revenue and 5.5% of the County’s Operating Budget.”

Since the 2012 millage increase, the year-end general fund balance has grown–by almost $10 million per year until 2016 when it reached $77.9 million.  Could the county expand tax relief or cut spending to reach the 5 percent recommended level?

A second area the controller focuses on is the health of the county’s pension fund.  The letter states “the positive changes enacted by the County provide an estimated savings based upon hypothetical future employees” but notes that in the shorter term more money has to be devoted to the pension system.  In 2018 the county contributed $38 million to pensions (up by $8 million since 2014), and that amount is matched in aggregate by employees.

The county’s reforms changed benefits based on years of service, final average salary calculations and how overtime is treated.  After several attempts to get changes through the General Assembly, the county’s reforms went into effect in 2014.  while we have recommended that new hires be placed into defined contribution plans there was no movement toward that for the county.