SALISBURY – A positive report on Wicomico County’s financial statements highlighted a presentation this week.
On Tuesday, representatives from PKS & Company presented the Wicomico County Council with a clean, unmodified audit report for fiscal year 2020.
“This means the financial statements present fairly the financial position of the county in accordance with accounting principles,” said PKS Partner Mike Kleger. “It’s also known as a clean opinion and is the highest level of assurance we can provide as auditors.”
While the report highlighted Wicomico’s strong financial position, Kleger noted audit testing revealed two material weaknesses and three significant deficiencies the county needed to address.
“These were primarily related to account reconciliations and a lack of review and monitoring financial records during fiscal year 2020,” he said.
PKS Partner Ashley Stern reported an unrestricted net position of $26.03 million in fiscal year 2020, as well as an unassigned fund balance of more than $37 million. She said that number was in line with accounting metrics from the Government Finance Officers Association, which recommends a fund balance of no less than 60 to 90 days of operating expenditures.
“Sixty days would be a fund balance of $23 million for the county, and 90 days would be $34.5 million of operating expenditures,” she said. “The unassigned fund balance for the general fund is at $37 million, so you have a little bit of a cushion. It’s about 102 days of operating expenses. It’s a significant method of showing the health of any government.”
In fiscal year 2020, the county’s general fund revenues decreased by $1.2 million, while general fund expenditures increased by more than $5 million, Stern said.
“This mostly has to do with an increase in your board of education funding due to maintenance of effort, public health costs, as well as the timing of various capital projects that occurred,” she said.
Stern added that revenues in 2020 were $1.2 million more than budgeted, while expenses were $2.97 million less than budgeted. Property tax and income tax accounted for the majority of general fund revenues, while salaries, other operating costs, debt service and board of education accounted for the majority of general fund expenditures.
When asked how Wicomico’s expenditures compared to other counties, Stern noted allocations were similar.
“Generally, education is the highest expense of any county,” she said.
Under enterprise accounts, Stern reported an increase in net position of $1.2 million for solid waste and a decrease in net position of $2.3 million for the airport. She said airport revenues decreased by $201,000 and expenses increased by $215,000.
“Do you think it may be time for the county to look at removing the airport as an actual enterprise fund and put it into a department within the county?” Councilman John Cannon asked.
Stern said it was an issue that auditors and county leaders were closely monitoring. While she noted the airport had seen a positive trend in net position prior to COVID-19, Stern said officials would reevaluate the situation in the future.
“Because of the COVID funds expected to come into the airport, their current budget does not include a general fund appropriation,” she replied. “It’s all about how the airport is being budgeted … We have it still on our radar, post COVID funding, to see how they are doing. But I think it’s time.”