Dunn County had unassigned general fund balance of $16.7 million at end of 2023
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By LeAnn R. Ralph
MENOMONIE — Dunn County had an unassigned general fund balance of $16.7 million as of December 31, 2023, although the balance should have been $13.7 million because $3 million that should have been transferred to the highway department had not been transferred.
The general fund unassigned fund balance of $16.7 million is 65 percent of the general fund expenditures, and anything above 30 percent is considered to be a strong ratio, said Greg Patel of Kerber Rose & Associates at the Dunn County Board’s September 18 meeting during the audit report.
Later on in the meeting, Kristin Korpela, county manager, explained that if the Dunn County Board decided to use $2.3 million of the $13.7 million unassigned fund balance to close the gap in the 2025 budget, leaving $11.4 million in the unassigned fund balance, the county would still have 38 percent of unassigned fund balance to general fund expenditures, which is still considered to be a strong financial position.
The conclusion of the Kerber Rose audit is a “clean, unmodified opinion,” which is the desired opinion, Patel said.
The audit notes several material weaknesses for internal controls that are a repeat of the 2022 audit, he said.
The material weaknesses include a list of account adjustments that meet with generally accepted accounting principles, Patel said.
The county also has a lack of segregation of duties. At all steps, financial duties should be completed by different people, he said.
In addition, cash reconciliation was not done in a timely manner, which presents a significant risk for fraudulent activity, Patel said, adding that he did not detect any fraudulent activity.
Dunn County should work on improving the cash reconciliation process, he said.
Neighbors
The Neighbors of Dunn County and the Dunn County Highway Department are the county’s most significant proprietary funds, Patel said.
The Neighbors had an overall loss of $1.5 million in 2023, which was offset by $750,000 from the general fund, he said.
Later on in the meeting during the budget discussion, Korpela pointed out that projections show the Neighbors will have a profit or a surplus in 2025.
The increase in Medicaid reimbursements and the stabilization of the workforce following the Covid-19 pandemic means that the Neighbors expected to be able to return the $2.8 million to the general fund, Korpela said.
If the Neighbors has a surplus of $500,000 in 2025, that money will go into the unassigned general fund balance, she said.
With the projections from management and an expected increase in the number of people living at the Neighbors, the advances from the unassigned fund balance could be paid back in three to five years, Patel said.
Highway dept.
The highway department does road maintenance and construction and receives additional revenue from doing work for the state and for local municipalities, Patel said.
The highway department had a loss of $372,000 in 2023, he said.
A county road and bridge fund is being established for the highway department, and the property tax levy will go into that fund, Patel said.
The special fund will allow road maintenance and construction costs to be separated out, he said.
The $3 million transferred to the highway department will fix the negative balance, but that will not show up until the 2024 audit, Korpela said.
The overall loss will be offset by the transfer of $3 million in funds, Patel said.
Most counties have special funds for highways, and a special fund adds to the transparency. The operational effects are cleaner on the property tax levy and the transportation aid, he said.
Kerber Rose
After Patel finished giving the audit report, Korpela noted that Dunn County contracted with CliftonLarsonAllen LLP as the county’s auditing firm for many years.
At the end of 2022, CLA said the company would be unable to continue serving Dunn County, and the county had to find a different auditor, she said.
Kerber Rose has completed the 2022 and the 2023 audit, Korpela noted.
One of the recommendations from Kerber Rose was to enlist help in making the highway numbers clearer, she said.
Dr. Beata Haug, Dunn County’s chief financial officer, worked with consultants over the past 18 months to improve the reporting on the highway department’s financials, Korpela said.
Duties
Andrew Hagen, county board supervisor from Menomonie, asked about the segregation of duties noted in the audit report.
Segregation of duties has been listed in previous audit reports. Have any solutions been put into place? he asked.
When can the county board expect changes and how will those changes be tracked? Hagen asked.
Dunn County does not have enough financial staff to segregate duties in the way the auditor would like to see, said Kelly McCullough, county board supervisor from Menomonie and chair of the county board.
The county would have to create new positions and hire more people, and the Dunn County Board historically has been resistant to creating new jobs and hiring more people, he said.
This is not a “the sky is falling” finding. Segregation of duties has been on every audit for at least the last 15 years, Korpela said.
Lynn Niggemann, county treasurer, and Dr. Haug have been working on protocols recommended by Kerber Rose, and they have made good progress, she said.
Niggemann was appointed as county treasurer in April and began her duties in late May.
Niggemann served as the administrator-clerk-treasurer for the Village of Colfax for nearly 10 years. Prior to that, she worked for the City of Menomonie, and before that, she worked at UW-Stout in grant administration.
Niggemann also serves as the administrator-clerk-treasurer for Colfax Solid Waste & Recycling. She is widely viewed by the CSW&R management committee as the reason why the program has been successful during the past three years of operation. CSW&R has built up enough surplus that equipment could be replaced without an additional property tax levy on the residents of the nine municipalities that participate in the program.
The auditor is talking about internal controls over cash, said Gary Stene, county board supervisor from Colfax and vice-chair of the Dunn County Board.
An example of segregation of duties might be one person accepting cash for a permit of some kind, another person issuing the permit, a third person writing out the receipt, and a fourth person depositing the money in the department’s account. Each of the four people would have to document their part in the transaction.
All municipalities have segregation of duties listed as an issue in their audits, whether it is villages, towns, cities or counties, Stene said.
It is not feasible for municipalities to hire enough people to have a complete segregation of duties, he said.
Auditors for Dunn County, and for municipalities in Dunn County, have said in the past that segregation of duties is listed for the vast majority of municipalities for which they conduct audits.
The auditors have not seemed to be very concerned about segregation of duties because various committees, on the county level, review the financials on a monthly basis.
In the case of villages, towns or cities, the village boards, the town boards and the city councils review the financials on a monthly basis.
