Cash flow problems in Cambria County government have forced controller Edward Cernic Jr. to take what he terms drastic measures.
In a memo sent to all county row officers and department heads, Kristine Segear, first deputy controller and senior accounting manager in Cernic’s office, said all employee expense reimbursements will not be paid until further notice.
“At this point our first priority is making sure we have enough cash to cover payroll in the next two months and to make sure we have enough cash to cover the loan payments due in December so the county does not default on its loans,” read the memo.
Estimates are that expense reimbursements total about $7,500 a month, and while a small amount in relation to the county’s overall budget, it is a step that needs to be taken, Cernic said.
“It’s not a huge amount in the whole scheme of things, but at this point, we’re looking for nickels and dimes,” he said. “I had to make that call. I don’t have the money.”
With most of the 2013 real estate taxes due the county already paid by October, cash flow has historically been a problem, but no action last year to increase revenue makes the problem worse, Cernic said.
Some bills, including payroll, have been paid over the past several weeks by borrowing funds from county agencies, money that must be repaid, Cernic said.
Money for the Nov. 1 county payroll of $1.2 million must be available for transfer Tuesday, and as of midweek, Cernic said he has $700,000 of the total.
A monthly payment of $1 million due to cover employee health care benefits will definitely not be paid by the first of the month, he said.
It is that million-dollar payment the county makes every month into the self-insured account that made the county’s financial woes worse, said Commissioner President Douglas Lengenfelder.
“We told Ed not to make the (October) payment to the health care fund. He made the payment unbeknownst to us,” he said. “We were going to replenish it when we were in a better financial condition.”
Lengenfelder argued Wednesday that withholding the payment would have provided much-needed cash flow and it would have had no impact on county employee insurance coverage.
“That $1 million would have covered a lot of mileage reimbursements,” Lengenfelder said.
Not making the payment would have been irresponsible, Cernic countered.
“The county is committed to making those payments into that self-insured fund. We have an agreement with the county health care committee,” Cernic said.
Not paying the payment into the fund would be the same as not forwarding the federal withholding taxes that have been deducted from employee wages, he said.
“If you’re not putting the money in, you can’t withhold it,” he said of the 15 percent employees pay toward their coverage.
Of growing concern for Cernic is the $300,000 due for services and materials provided to the county by vendors.
Many of the accounts are now overdue by 45 to 60 days, he said.
Lengenfelder said he and his fellow commissioners continue to work with banks on a funding package that will carry the county through the end of the year and allow it to repay its tax anticipation loan.
One-half of the $1 million borrowed in early 2013 was repaid at midyear while the remaining half-million dollars must be repaid by year’s end.
“I’m really hoping to have an answer back from banks. It might take till mid-November,” he said.
Cernic said the expense reimbursements are primarily for the 561/2 cents per mile the county pays employees who use their private vehicles for county-related business.
Cernic estimated the average payment to employees runs about $100 a month.
Kathy Mellott covers the Cambria County courthouse for The Tribune-Democrat. Follow her on Twitter at twitter.com/kathymellotttd.