County reviews financial outlook

The county’s finances look strong now. That could change if a pattern continues of the county spending more than it brings in.

Jay County Council reviewed a comprehensive financial plan with Jason Semler of consulting firm Baker Tilly during a special meeting Monday.

Semler walked officials through a 50-page report sharing figures from recent years and projections for the next few years, comparing estimates for each fund.

In 2021, the county’s general fund ended with a balance of nearly $4.6 million, approximately 56% of its operating balance.

“That’s what I usually have, my ultimate goal for a client, is to be able to get to 50%,” Semler said. “Very, very few communities can get to 50%. … for most of my clients, if we can get to 25%, I’d be ecstatic, because that’s a lofty goal.”

His projections for the end of this year, 2024 and 2025, showed end-of-year operating balance estimates of 42%, 32% and 23%, respectively. The decreases fall in line with ending cash balance projections, which drop from $4.7 million in 2022 to $4.14 million in 2023, $3.19 million in 2024 and $2.34 million in 2025.

Semler anticipates the county to end this year with a nearly $560,000 shortfall in its general fund. That trend continues for 2024 and 2025 estimates, which are about $947,500 and $850,000, respectively. The county would be pulling from its reserves to cover the gaps.

Semler noted his projections are made with the expectation that the county spends 100% of its budget, which he said it has not done historically. He added the budget still looks healthy for the next few years.

Past 2025, council member Cindy Bracy and Semler pointed out that the decreasing trend in the balance is not sustainable.

“What this looks like to me is, we’ve done a good job of not spending more than what we make, and so we saved a lot of money,” said Bracy. “And now we’re spending more than what we’re making, and so eventually we’re going to eat up what we saved.”

Officials looked through estimates for large parts of the budget. Throughout the analysis, the overall message stayed the same — the county can afford budget shortfalls for a few years. But balances such as the general fund will decrease if the county continues to spend more than it brings in annually.

Council president Jeanne Houchins asked for Semler’s opinion on how much the county should have saved in the rainy day fund, which currently has about $1.9 million.

He advised making a goal to get each fund at a 50% operating balance by the end of each year. From there, the county could look into adding more to its rainy day fund.

“What you don’t want to do is move things to your rainy day fund, and then start using them for operating expenses,” he explained.

Semler noted the projections he presented Monday may no longer be fully accurate because of decisions made during the Indiana General Assembly on Sunday. Several items approved by the state will impact the county’s finances, such as a decision to limit maximum levies to up to a 4% increase for the next two years. He pointed out he had anticipated Jay County’s maximum levy to grow by at least 5% or more in coming years.

Houchins asked if Baker Tilly could create a working spreadsheet with all of the budget data to show predictions in six months and a year from now. Semler said the firm could do that.

Ted Champ, a previous Jay County Council member and current member of Jay County Redevelopment Commission, pointed out Semler’s figures are worst case scenario estimates.

“So, if it’s not worst case scenario, and we’re not spending all the money, (those) numbers are going to be to the good of Jay County,” he said. “Because what you were going over, and what I saw … Jay County’s in pretty good shape right now.”

Houchins added the county has been frugal for the last several years and she doesn’t anticipate that will change.