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9. B. 2.
Lake Level Capital Project Fund Revised Deficit Elimination Plan
Jeryl Schoepke, Finance
Resolved, that the Calhoun County Board of Commissioners hereby approves the 2019 Lake Level Capital Project Fund Revised Deficit Elimination Plan, as presented, and hereby affirms County Administration's submittal on September 14, 2020 to the State of Michigan Department of Treasury the County's required response to the Notice of Intent to Withhold State Payments dated July 6, 2020.
It is recommended approval of the required attached response to the Notice of Intent to Withhold State Payments dated July 6, 2020. The Lake Level Capital Project Fund Revised Plan was prepared by the County Finance Office with concurrence from the Office of the Water Resources Commissioner and outlines a two year plan to eliminate the deficit in this Fund.
The County is required by the State of Michigan according to the Glenn Steil State Revenue Sharing Act of 1971, Public Act 140 of 1971, Section 21(2) to submit deficit elimination plans for any funds included in Audited Financial Statements that end in one of two deficit situations; either an unrestricted deficit fund balance; or a deficit when current liabilities are subtracted from current assets. The Water Resources Commission is considered a Component Unit of the County for financial reporting purposes and thus their balances are included in the County's Comprehensive Annual Financial Report (CAFR).
At the end of fiscal year 2019 a $129,000 deficit existed in the Lake Level Capital Project Fund as a result of capital expenditures for lake level projects for which future assessments will be necessary. In accordance with Public Act 140 of 1971 deficit elimination plans for the Lake Level Capital Project Fund are required and must be approved by the County Board of Commissioners. The approved resolution and deficit elimination plans are filed with the Michigan Department of Treasury.
After review of the projected budget, Michigan Department of Treasury did not accept the Lake Level deficit elimination plan as submitted on August 4, 2020. This plan incorrectly reduced the deficit to be eliminated by $10,600 due to a Special Assessments receivable balance. In the revised deficit elimination plan, budget for year one was adjusted by $10,600 in order to cover the full deficit amount of $129,000. The plan and supporting letters are attached.
The County is required to respond to the State of Michigan Department of Treasury's Notice of Intent to Withhold State Payments dated July 6, 2020. The Board of Commissioners could direct County Administration to modify its response.
It is recommended that the Calhoun County Board of Commissioners approve the Lake Level Capital Project Fund Revised Deficit Elimination Plan as presented and affirm the September 14, 2020 filing of the revised plan with the Michigan Department of Treasury.
Failure to submit this required deficit elimination plan would result in withholding of 25% of the County's State Revenue Sharing payments until such plan is submitted and approved. The County estimated annual State Revenue Sharing allocation for FY2019-20 is approximately $3.2 Million.
2019 Lake Level CP Fund Revised Deficit Elim Plan
2019 Audit Lake Level letter
Treasury Deficit Elim guidance
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