Audit report: Dunn County’s unassigned fund balance “at a good level”
PROTECTED CONTENT
If you’re a current subscriber, log in below. If you would like to subscribe, please click the subscribe tab above.
Username and Password Help
Please enter your email and we will send you a password reset link.
By LeAnn R. Ralph
MENOMONIE — Dunn County’s unassigned fund balance of $10.9 million for the year ending December 31, 2020, is 49.9 percent of the general fund expenditures.
Going from 38.7 percent of unassigned fund balance to general fund expenditures to 49.9 percent is “a positive move” and is largely due to the debt restructure for The Neighbors of Dunn County, said April Anderson of Clifton Larson Allen LLP at the Dunn County Board’s July 28 meeting.
In 2019, when Dunn County had 38.7 percent of of unassigned fund balance to general fund expenditures, the unassigned fund balance was $8.4 million.
The unassigned fund balance is money the county has set aside that is not designated for a specific purpose.
Auditors want to see the unassigned fund balance to expenditures to be in the 25 to 33 percent range, Anderson said.
Clifton Larson Allen works with 170 governmental entities in northwest Wisconsin, and the counties usually have a percentage of unassigned fund balance to general fund expenditures of 35 to 45 percent, she said.
According to the audit report, in 2018, Dunn County had an unassigned fund balance of $8.3 million and a percent of unassigned fund balance to general fund expenditures of 38.8 percent.
In 2017, Dunn County had an unassigned fund balance of $9.1 million and a percent of unassigned fund balance to general fund expenditures of 44.3 percent.
The unassigned fund balance allows the county to have money on hand for unknown expenditures, Anderson noted.
Unmodified opinion
The audit report is 85 pages, and Clifton Larson Allen has given Dunn County an “unmodified opinion,” the highest opinion that can be issued and is a “clean opinion,” meaning that budget items are being properly recorded, Anderson said.
Under “internal controls,” however, Dunn County has two material weaknesses and one significant deficiency, she said.
The material weaknesses and significant deficiency are common findings that Clifton Larson Allen issues among the governmental entities for which the company conducts audits, Anderson said.
The first material weakness is “annual financial reporting under generally accepted accounting principals.” The governmental entity has the responsibility to complete the annual financial reporting but asks Clifton Larson Allen to do the reporting instead of completing the reporting internally, she said.
The second material weakness is “material audit adjustments.” Instead of Dunn County completing the audit adjustments, Clifton Larson Allen does the audit adjustments at the end of the year, Anderson said.
As for the significant deficiency, Dunn County has limited segregation of duties. Due to the county’s limited staff, the duties cannot be split up. Ideally, only one person in a department would be able to make entries for revenue, and only one person would be able to make entries for expenditures, for example, she said.
Dunn County does have mitigating controls, which includes the annual audit, Anderson noted.
Highway dept.
The highway department had a negative unrestricted fund balance of $4.1 million in 2020, according to the audit report.
The county loaned the highway department $4 million from the general fund in 2020 to pay for highway operations, Anderson said.
In 2019, the highway department had a negative unrestricted fund balance of $1.6 million.
In 2018, the highway department’s unrestricted fund was a positive $1.98 million, and in 2017, the unrestricted fund was a positive $3.96 million, according to the audit report.
The highway department’s expenditures exceeded the revenue in both 2020 and in 2019, Anderson said.
The current ratio of assets to current liabilities for the highway department is .17. The desired ratio is 1, she said.
In 2019, the highway department had ratio of .27 of assets to liabilities. In 2018, the ratio was 4.43, and in 2017, it was 4.45.
Anderson said she would like to see the ratio increase to 1 for the highway department.
The Neighbors
The Neighbors of Dunn County had a negative unrestricted fund balance of $1.8 million in 2020, which was an improvement over 2019, when the unrestricted fund had a negative balance of $7.76 million, according to the audit report.
In 2018, The Neighbors had a negative fund balance of $6.8 million, and in 2017, the fund balance was a negative $3.96 million.
The debt restructuring for The Neighbors and improvements in operations helped improve the financial outlook, Anderson said.
The improvements in operations included an increase in the Medicaid reimbursement rate from the state of Wisconsin.
The Neighbors also was able to repay $4 million to the county that the county had covered since 2012, Anderson said.
Long-term debt
Dunn County had long-term debt obligations of $35.79 million in 2020, according to the audit report.
Under state law, municipalities can borrow up to 5 percent of their equalized value, Anderson said.
Dunn County has a debt limit of $180 million, and $35 million is 19 percent of the debt limit, she said.
Counties in northwestern Wisconsin use anywhere from zero percent of their debt limit to about 20 percent of the debt limit, Anderson said.
Dunn County’s outstanding long-term debt “is reasonable,” she said.
In 2020, the county paid $3.4 million on the principal for the debt and paid $1.3 million in interest and other fiscal costs, Anderson said.
In 2019, Dunn County had general obligation bonds and notes of $38.77 million, which was 23.1 percent of the county’s debt capacity.
In 2018, Dunn County had general obligation bonds and notes of of $33.4 million, which was 21 percent of the county’s debt capacity.
In 2017, Dunn County had general obligation bonds and notes of $35.5 million, which was 23.4 percent of the county’s debt capacity.
Overall, the general fund is looking positive, and the debt restructuring for The Neighbors has helped. The unassigned fund balance is at a good level, Anderson said.
The county will have to keep an eye on the expenditures and revenues for the highway department, she said.
