According to financial audit findings presented by Ulrich & Associates, Morgan County is in good shape, but needs to improve on communicating between departments, tracking garbage administration costs, segregating duties, and posting meeting minutes to the state website. The 2015 audit highlighted the county’s portion of the state retirement deficit and lead to the council wanting to take a closer look at their payroll system process.
Charles Ulrich presented the “clean opinion” for Morgan’s 2015 finances at the Morgan County Council’s Sept. 6 meeting.
While the council originally planned on a $5.438 million budget, the county ended up bringing in $5.707 million in revenue and spending $5.445 million. Ulrich said expenditures were under budget by $245,000 because revenues were up and expenditures were down.
“You are in great shape,” Ulrich told the council. “The county is really in good financial shape.”
That condition is based on tax revenue.
“If you were trying to self-fund all your operations (without tax revenue), you would be way in deficit,” Ulrich said.
Although counties haven’t typically been audited as a private business would be, Ulrich shared that if Morgan was considered a business, it would have $9 million in equity at the close of 2015, an increase in $102,000 compared to the previous year.
Ulrich did offer some suggestions for improvement, the biggest being that county departments should improve communication.
“One of the biggest challenges you have had is communication between departments. There is a need to increase the ability to communicate,” Ulrich said. “There is no surprise that departments operate autonomously. It is an awareness thing. Small steps will have a big impact to work together in a coordinated way.”
Ulrich said while the county took in $63,000 for the garbage fund, they may not be capturing all the administrative expenses required to operate the garbage service. Despite an attempt made to fully identify garbage administration costs during the year, “it didn’t happen like it needed to happen,” Ulrich said.
Ulrich urged the council to fully identify the costs associated with billing, collecting, and delivery garbage cans to county residents. Until then, it may look like the county is charging too much for garbage services, he warned.
Armed with an initial estimate of $100,000 for garbage administration costs, Councilman Robert Kilmer said, “If we were running the garbage and covering costs out of the garbage bill, we would be operating at a negative. We are subsidizing garbage at this point. That $100,000 came from different departments.”
Councilwoman Tina Cannon called the $100,000 estimate “an educated guess of a department head,” that could be substantiated with better time tracking.
Ulrich suggested the county improve their segregation of duties, which would lead to better internal control.
He also said that to comply with a state legal compliance checklist, council minutes need to be posted to the Utah Public Notice Website within three days of approval. In 2015, the council was not posting their minutes to the state website, he said.
He also suggested the county take care of the $2,600 it overspent in the mineral lease fund.
Ulrich was required for the first time to formally acknowledge Morgan’s $1 million deficit in the Utah Retirement System during his audit.
“They don’t have enough money to fund everyone who retires,” Ulrich informed council members. “Your share of the deficit is $1 million. Over the upcoming years, that will be funded one way or another: increase pension contributions or a better rate of return on the money invested. It is an actuarial calculation we just have to watch and be aware of,” Ulrich said, noting that the council can expect future discussion on URS from the state legislature. “They are trying to fix the state retirement system.”
In the same Sept. 6 meeting, and after an executive closed-door meeting, the council voted unanimously to spend an additional $3,500 to $5,500 for Ulrich to work with county management to provide an analysis and assessment of the county’s payroll system process to determine where deficiencies exist and to what extent. The analysis will look at the tracking of retirement, vacation and sick leave as well as cafeteria plan and payroll tax obligations.
Ulrich said this was not an “audit,” but a procedure to analyze a specific element of the financial process.