The Patrick County Board of Supervisors reviewed the proposed fiscal year 2025-2026 budget during its Feb. 24 budget session. The proposal included a $2.4 million deficit between county revenues and required and/or requested funding for payroll, insurance, benefits, departmental requests, and other outside requests.
While the board looks to reduce expenses, County Administrator Beth Simms said, “One thing that we’ve talked about for the last year or two and is in the budget is creating some financial policies or kind of
different pots for stuff like this. So, right now we just have that one pot of money and there’s no real direction of it. It’s just sit there, save it, don’t touch it – which is fine. But if you have a capital fund or budget stabilization fund, then when things like this need to be funded you’re not just dipping into that unrestricted” fund balance.
Mayo River District Supervisor Clayton Kendrick advised against using the fund balance unless absolutely necessary, citing the county’s financial struggles five years ago.
Smith River District Supervisor Doug Perry asked if there was a recommended percentage for the unassigned fund balance.
“I know we brought it down to 21 percent with the HVAC at the library and something else,” he said of the costs of repairs and maintenance projects in the current budget cycle.
Simms said the current unassigned fund balance is 22.74 percent, with the Government Finance Officers Association (GFOA) recommending a minimum of 16.67 percent, or two months’ worth of expenditures.
Some of the balance is already allocated for capital projects this fiscal year, Finance Officer Lori Jones added.
Perry suggested implementing a policy requiring any excess funds above a certain percentage to be transferred into a capital improvement budget, ensuring the county maintains an emergency fund while also planning for future infrastructure needs.
Kendrick recalled that the county previously had a $2.5 million contingency fund, but it was gradually spent down, “kind of like we’re talking about the reserved funds to keep balancing budgets and buying other things. Before you know it, we’re broke and we’re borrowing money every year,” he said.
Simms proposed dividing the unassigned fund balance into separate funds, “because any local government’s going to have to invest in its public infrastructure, so having one pot of money for that – your capital. One pot of money, like you’re saying, the one you really don’t touch unless it really is a crazy emergency. Then another budget stabilization fund to kind of catch those things, like when the library HVAC broke last year, to kind of catch those unexpected items,” Simms said of categories that may include capital improvements for infrastructure projects, emergency reserves to cover unexpected crises and budget stabilization to address unforeseen expenses.
Kendrick noted that the unassigned fund balance is currently generating about $750,000 annually in interest.
“When we didn’t have it in there, I’ll tell you, it’d been rough,” he said. “The first year I was on the board, it was tough. We got rid of a lot of stuff—a lot of positions, jobs, raises—everything the county needed. It was tough to get it back up, and I don’t want to ever see the county get in that kind of shape again.”
Instead of taking some funds from the unassigned fund balance, Kendrick suggested the board should start putting money in a separate account.
Audit Presentation
Scott Wickham, CPA, CFE, of Robinson, Farmer, Cox Associates (RFC), presented the county’s audit report, stating that Patrick County received an unmodified, clean opinion, the highest rating an independent auditor can give.
State Noncompliance Finding — the only state-level issue involved the Children’s Services Act (CSA), due to missing documentation following a staff transition.
“During our testing, CSA had a transition in staffing during the year and we were unable to find some of the documentation requested during our test selection. It did appear that the newer records were there, but we were testing across the whole year, and some of the prior personnels filing was not there for us to find and review and approve to make sure it was up to standard,” he said.
Federal Compliance Findings — the school board lacked documentation proving contractors met Davis-Bacon prevailing wage requirements.
“The school board did not have documentation from the contractor that they did comply with those requirements. We do not know if they did or did not, but during our testing we did not have support to prove that they did. So, there was a finding for noncompliance with that federal requirement,” he said.
The American Rescue Plan Act (ARPA) report contained timing errors, though total figures were accurate.
“The numbers you provided were inaccurate based on the timing of the report. In total they were accurate but based on the deadlines required they were not. So, technically it is inaccurately reported, but it will correct itself essentially as you all file the final report,” Wickham said, adding he doesn’t think it’s “a super significant deal as it will” be fixed.
Wickham said the county’s five-year trend shows:
*Assets have grown by 3.5% annually.
*Liabilities have decreased by 4.5% annually.
*General fund revenues have increased by 10% annually, including 3.74% annual growth in property tax revenue and 14% annual growth in intergovernmental revenues, largely due to ARPA funding.
Operating expenditures have increased by 13 percent per year, with school board expenditures growing 11 percent annually, driven by grants and the additional 1 percent sales tax for school funding.
“I know several years ago I was here and talked about we were a little bit in dire situation of fund balance and really needed to grow and make sure that you have a balanced budget and all those things,” Wickham said. “To see those amounts grow is really encouraging so you’ve done a good job of having positive growth in your position. Still want to maintain that balanced budget, but it’s really good to see that growth.
Overall, Wickham said Patrick County is seeing an almost 10 percent growth in revenues per year.
According to the five-year trend information on the general fund, the county also sees a 13.03 percent growth in total operating expenditures per year and a 12.30 percent growth in total expenditures per year.
Wickham said the school board operating expenditures have grown by almost 11 percent per year over a five-year time frame.
“A lot of that also is grant-driven, so they’ve had some significant ARPA and ESSER grants over that time period, so a lot of their spending increase has become of that as well. They also have received some additional one percent sales tax that, you all have passed that and so that funding comes to the county and then flows to the school board,” he said.
As of June 30, the county’s unassigned fund balance, or what it has available to use is $15,532,849. The unassigned fund balance’s compound annual growth rate is 24.78 percent.
Wickham said the national organization Government Finance Officers Association (GFOA) recommends about two months unassigned fund balance, or 16.67 percent, of general operating expenditures.
He noted the county’s debt balances have decreased, and the county’s been paying down its bonds and debts.
“You’ve done a good job of having positive growth in your position,” Wickham said.
Patrick County’s current debt per capita is $3,217, below the state average of $4,063.
The board also:
*Approved a letter of support for ZiTel’s Broadband Equity, Access, and Deployment (BEAD) application.
*Appointed Bryce Simmons as an At-Large member of the Stormwater Board of Appeals.
*Appointed Janet Rorrer as the Mayo River District representative on the Planning Commission.
*Appointed Jerry Adams to the West Piedmont Planning District Commission (WPPDC) as an At-Large member.
*Appointed Ed Pool and Vance Agee as At-Large members of the Planning Commission, both in 3-2 votes.
