State Auditor Pat Anderson released a comprehensive report on the finances of Minnesota's counties this month.
Counties must hold substantial funds from year to year because the majority of county revenues -- property tax receipts and state aid payments -- are not received until May or June. Fund balances are the sum of money counties hold to cash flow expenditures in the first part of the year. Counties held a total of $1.71 billion in unreserved fund balances at the end of 2003. This represents an increase of 4.5 percent above the level in 2002.
"Taken as a whole, county unreserved fund balances were 45.8 percent of their total current expenditures in 2003, which puts them within the acceptable range," Anderson noted.
The state auditor's office maintains a standard scale for counties' unreserved fund balances. Acceptable fund balances are those between 35 and 50 percent of a county's yearly expenditures. A total of 15 counties had unreserved fund balances within this range at the end of 2003. A total of 56 counties had fund balances above 50 percent of their yearly expenditures while 14 had fund balances below 35 percent.
The following table details the unreserved fund balances as a percentage of total current expenditures for the counties in the north-central economic development region.
* Cass County, 80.2 percent, high.
* Morrison County, 62.4 percent, moderately high.
* Crow Wing County, 48.7 percent, acceptable.
* Todd County, 43.7 percent, acceptable.
* Wadena County, 32.5 percent, low.
"While not as high as many counties in Minnesota, Cass County's fund balance is fairly high," Anderson said. "County commissioners in Cass County should be prepared to explain to taxpayers why they are holding that amount of money in reserve.
"A fund balance within the acceptable range will supply counties with the resources to cover expenditures in the first half of the year. At the same time, it guarantees that counties are not accumulating more tax dollars than is necessary."
Statewide, fund balances ranged from 18.9 percent of yearly expenditures in Traverse County to 180.4 percent in Blue Earth County.
The report includes the counties' audited financial data for the year ended 2003, as well as the self-reported 2004 and 2005 summary budget data. The report showed that Minnesota's 87 counties received $4.48 billion in revenue in 2003, an increase of 0.1 percent from 2002. Counties spent $4.59 billion from governmental funds to provide county services, a decrease of 3.4 percent, the first such decrease since 1991.
The 2003 per capita revenues and expenditures for the counties in the north-central economic development region detail area counties, their expenditures and their rank amid the state's 87 counties.
* Cass County, 20.
* Wadena County, 39.
* Morrison County, 49.
* Todd County, 57.
* Crow Wing County, 65.
In looking at counties' self-reported budget data for the years 2004 and 2005, it appears that expenditures also decreased in real dollars in 2004 as counties reported $4.58 billion in expenditures. In 2005, however, counties have budgeted to spend $4.89 billion, bringing the total expenditures back above 2002 levels. It is important to keep in mind that the 2004 and 2005 numbers are unaudited, self-reported budget figures.
The self-reported data also shows that counties budgeted to spend down their reserves in 2004 and 2005. In 2004, counties reported a decrease of $50.8 million in the amount of money held in an unreserved fund balance. In 2005, they have budgeted to decrease that level by another $33.1 million.
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