To: Martin L. Cousineau, Finance Committee Chairperson
From: Chrystal Simpson, Chief Financial Officer
title
RE: Approval of the fiscal year 2025 Deficit Elimination Plan and directing the Department of Fiscal Services to submit the plan to the State of Michigan
recommendation
BOARD ACTION REQUESTED:
Approval of the deficit elimination plan to be submitted to the State.
BACKGROUND:
In accordance with Public Act 140 of 1971, a local unit of government ending its fiscal year in a deficit condition shall formulate and file a Deficit Elimination Plan (DEP) with the Department of Treasury within 30 days of receiving a letter after the filing of the County’s Annual Comprehensive Financial Report (ACFR).
DISCUSSION:
The county’s ACFR was filed timely for the year ended September 30, 2025, as required, with the Michigan Department of Treasury. The DEP must be certified by Treasury for the County to obtain “qualified status”. Qualified status is required before the County can issue bonds or notes, such as the annual delinquent tax notes issue.
The deficit elimination plan is outlined in the resolution which includes the following Funds:
Vehicles and Equipment Fund which should be resolved by fiscal year ending
September 30, 2027. The deficit was reduced by $742,952 during fiscal year ending September 30, 2025. During the budget process for fiscal year ending September 30, 2025, the rates for motor pool were re-evaluated as the cost for vehicles and upfitting had increased significantly. As a result of the rate changes, the revenue for the use of vehicles increased 9.5% for the fiscal year ending September 30, 2025. This increase and a 2% projected increase in revenue for fiscal years 2026 and 2027 will aid in resolving the deficit that existed as of September 30, 2025, whereby the current assets exceeded the current liabilities in that fund by $904,779.
Self-insured Medical Fund has a deficit of $2,701,112 due to increased medical costs related to the increased need for medical care service utilization, several high-cost claimants, and continued high brand-name and specialty pharmacy utilization. This should be resolved by fiscal year ending September 30, 2026 with a transfer from General Fund from assigned fund balance.
IMPACT ON HUMAN RESOURCES:
No impact.
IMPACT ON BUDGET:
For the Self-insured medical fund, a transfer will be made from General Fund’s assigned fund balance for deficit reductions.
IMPACT ON FACILITIES:
No impact.
IMPACT ON TECHNOLOGY:
No impact.
CONFORMITY TO COUNTY PRIORITIES:
Monitoring of funds with deficits aligns with the Long-Term Financial Stability priority.
resolution
TO THE HONORABLE CHAIRPERSON AND MEMBERS OF THE GENESEE COUNTY BOARD OF COMMISSIONERS, GENESEE COUNTY, MICHIGAN
LADIES AND GENTLEMEN:
WHEREAS, the County of Genesee’s Vehicles and Equipment Fund has a current asset minus current liability deficit of $904,779 on September 30, 2025; and
WHEREAS, 1971 PA 140 requires that a Deficit Elimination Plan be formulated by the local unit of government and filed with the Michigan Department of Treasury.
NOW, THEREFORE, BE IT RESOLVED, that the County of Genesee’s legislative body adopts the following as the Vehicles and Equipment Fund Deficit Elimination Plan:
|
|
2026 |
2027 |
|
Unrestricted Net Position (Deficit) Oct. 1 |
$ (2,090,725) |
$ (316,294) |
|
|
|
|
|
Revenue |
|
|
|
Charges to other Funds |
2,584,835 |
2,636,532 |
|
Investment Income |
6,500 |
6,630 |
|
Gain on Sale of Assets |
240,000 |
244,800 |
|
Transfers In |
1,000,000 |
1,000,000 |
|
Total Revenue |
3,831,335 |
3,887,962 |
|
|
|
|
|
Expenditures |
|
|
|
Salaries and Fringe Benefits |
465,694 |
475,008 |
|
Supplies and other operating expenses |
1,591,210 |
1,623,034 |
|
Depreciation |
1,600,000 |
1,620,000 |
|
Total Expenditures |
3,656,904 |
3,718,042 |
|
|
|
|
|
Add Back Depreciation (Net Investment in Capital Assets Net Position) |
1,600,000 |
1,620,000 |
|
|
|
|
|
Unrestricted Net Position (Deficit) Sept. 30 |
$ (316,294) |
$ 1,473,626 |
|
|
2026 |
2026 |
|
CA-CL (Deficit) Oct. 1 |
$ (904,779) |
$ 869,652 |
|
Revenues |
3,831,335 |
3,887,962 |
|
Expenditures |
(3,656,904) |
(3,718,042) |
|
Add Back Depreciation |
1,600,000 |
1,620,000 |
|
CA-CL (Deficit) Sept. 30 |
$ 869,652 |
$2,659,572 |
Explanation: Increase charges to other funds by approximately 2% in 2027.
BE IT FURTHER RESOLVED that the County of Genesee’s Chief Financial Officer submits the Deficit Elimination plan to the Michigan Department of Treasury for certification.
WHEREAS, the County of Genesee’s Self-insured Medical Fund has an unrestricted net position deficit of $2,701,112 on September 30, 2025; and
WHEREAS, 1971 PA 140 requires that a Deficit Elimination Plan be formulated by the local unit of government and filed with the Michigan Department of Treasury.
NOW, THEREFORE, BE IT RESOLVED that the County of Genesee’s legislative body adopts the following as the Self-insured Medical Fund Deficit Elimination Plan:
|
|
2026 |
|
Unrestricted Net Position (Deficit) Oct. 1 |
$(2,701,112) |
|
|
|
|
Revenue |
|
|
Charges to other Funds |
18,538,000 |
|
|
|
|
Expenditures |
|
|
Supplies and other operating expenses |
18,538,000 |
|
Other Financing Sources |
|
|
Transfers In |
2,701,112 |
|
|
|
|
Unrestricted Net Position Sept. 30 |
$- |
Explanation: The County General Fund will make a transfer to cover the deficit.
BE IT FURTHER RESOLVED, that the County of Genesee’s Chief Financial Officer submits the Deficit Elimination plan to the Michigan Department of Treasury for certification.