Cambria County ended 2013 without a deficit, but only because of a year-end $5 million loan, a new audit shows.
The county’s annual audit report was released Thursday, unleashing a firestorm of debate between board of commissioners President Douglas Lengenfelder and county Controller Edward Cernic Jr.
Cernic expressed concern that the county is headed toward default.
Lengenfelder said the commissioners continue to deal with financial issues, but maintained that the budget categories controlled by the commissioners showed a small balance.
“The overall general fund – those are pretty much considered the dollars that (we) manage – at the end of the year there was a balance of $586,000, which is very encouraging,” Lengenfelder said.
Of the $57 million general fund budget, Lengenfelder said $35 million goes to salaries and benefits for employees.
The figure does not include money that comes back to the county in reimbursements from state agencies, Cernic said.
The $5 million long-term loan was key for the county making the financial move from 2013 into 2014 and beginning the tax revenue season, said Joel Valentine of the auditing firm of Wessel & Co.
“The loan made things look much better,” Valentine said. “It allowed them to keep their core funds out of the red.”
Those core funds are the general and related accounts used in daily county operations.
The controller continues to voice concerns about the financial condition of the county through the end of 2014.
Payment of a $5 million tax anticipation loan, due July 1, is being processed for the bank, and there is enough money to make the July 11 county payroll of more than $1 million.
“The county would have defaulted without that $5 million loan,” Cernic said. “Without the $5 million loan, the county would have defaulted on the tax anticipation loan (also $5 million) and we would not have gotten a new loan.”
He added: “We’re going to have cash flow problems in July.”
Lengenfelder countered that there are “all sorts of actions a county can take before defaulting, including not funding the pension fund.
“I think it’s irresponsible to be throwing out a term like ‘default’ on a regular basis,” Lengenfelter said.
Cambria has a healthy pension-fund balance estimated at $187 million with 700 retired employees participating, Lengenfelter noted.
Cernic noted that the state reduced payments into its pension fund when it had a healthy balance, with negative results.
“Are you suggesting the county go the way of the state?” Cernic said.
Lengenfelder suggested Cernic agree to a change in computer software in the controller’s office, which the commissioner said would save maintenance fees and expand access to financial records.
“We want something all of our county managers can easily access and use,” he said.
Earlier this month, the commissioners hired a bond rating company to determine the financial condition of the county in the hopes of improving the current BBB rating.
The step could be the first toward some type of refinancing in hopes of improving the county’s financial condition.
Kathy Mellott covers the Cambria County Courthouse for The Tribune-Democrat. Follow her Twitter at twitter.com/kathy mellotttd.