Thursday, June 04, 2009

Keep Checking My Site

I'll be back. I've been doing a lot of research; we have two strong bids from WM and PDC to expand and operate the City/County Landfill. Four hours of testimony and questions this morning. Two massive hard copy presentations to try to understand. Full Board meeting tonight on County issues. Peoria County is in pretty strong financial shape as are our fund balances. We carry less than $2 million in debt. I am in full agreement with Administrator Urich that we wan't to maintain a strong financial position. We are not in agreement on some spending but our full board advises our administrator.

We've lost some money on investments but so have most other governmental bodies not to mention the private sector. (Includes me) All capital expenditures are on hold.

I wrote an "Opinion" on Bel-Wood that will appear in the JS this weekend with Board member Salzer writing an opposite opinion.

Doing a lot of reading. playing tennis plus I seem to have less energy than I had 5 years ago. Hmmmmm.


Karrie E. Alms said...

Merle: WHile the public facility tax referendum was in process --- I recall, hopefully correctly, that Erik Bush stated that the current Peoria County debt was at $19M? Is that correct?

Also, what is the total amount of fund reserves of Peoria County?

Are the fund reserves invested in the market? If yes, what type of investment instruments? Thanks.

Erik Bush said...

Hi Karrie, Merle;

Merle was correct that we have $2M in debt service payments in 2009. It's the annual amount of principal and interest we pay down of our total debt, which you are correct, stood at $19M in 2008.

We oversee a total of 43 funds with a collective total of roughly $69M in reserves at the end of 2009.

State statute generally frowns on dumping government money in what is seen as "the market". The principles for investing public funds are guided by safety, liquidity, and yield, in that order. This means public funds must first be protected from risk, second be available to convert into cash, and only after those two conditions are met, can they grow.

This means that risk aversion mutes earnings. By and large, reserve funds are invested in overnight federal funds or individual CD issues, which are considered the safest investment vehicles.

merle widmer said...


At least two questions went unanswered. Patrick mentioned a "loss in investments". How much and in what "vehicles" were these losses, how much and are they continuing?

Also, I beleive Patrick said that the county had lost $6-7 million in potential revenue that we cduld not recover. To what was he referring and will this loss possibley expand as the year goes on?

As too the $350,000 already paid out to consultants, what time frame did that cover and what has accumulated and still not billed or billed but not been paid. What funds are these payments coming from?

Thanks, Eric and thanks, too, for your comments.

Erik Bush said...


A loss in investments refers to our forecast of investment/interest earnings and "Loss" in this context refers to year over year comparison.

All things being equal (for instance, $1.00 to invest in 2008 and $1.00 to invest in 2009), we make less in interest earnings in 2009 than in 2008. The interest rates offered to county investments (we invest in CDs for idle reserves and overnight federal funds for bank balances) are generally half to 75% less than what they were last year. So, if we invest $1.00, and we earned $0.50 last year, we are only earning $0.25 this year. Our loss is $0.25.

We accumulated $614,000 in interest income in 2008, we're forecasting $104,000 in 2009, all things being equal. We’re just earning less on cash.

They are and they aren't continuing. If a CD we held for 5% matured in February, we likely rolled that same money back into another CD at 2.5%. CD's maturing from this point in the year going forward may offer more attractive interest rates than earlier in the year, but it's speculative.

Loss in this context does not refer to money in investments which is no longer worth as much.

To potential revenue, again we're contrasting 2009 reality with 2008 results. Sales, income, and other economic related income sources collectively represent roughly $4 million in "Lost" revenue. Lost being used in the same context as above. Compound that with budgeted expenses - please recall that we budgeted $2 million in capital expenses to come from reserves - and we have roughly a $6 million budget shortfall because of the evaporation of revenues from our base of income. We took a pay cut. The capital expenses have already been trimmed back. The lost revenue figures are forecasts for the year based on what we're seeing today, but I don't think it gets larger. We have taken great care to develop our forecasts independently of one another in finance and then compare our individual analysis. Between Patrick, my budget analyst, and my own analysis, we're within $100k of each other on the end of year forecast so I'm comfortable with the number and its integrity as an estimate.

Lastly, the county has contracts with a project manager and architects which since June of 2008 when the project official "kicked-off" has generated billing of $350k. The project manager is a contract to pay $1,000,000 base fee over the life of the project including a 10% retainer; we've paid $225,000 through their May 4 billing. The architect billings are current and make up the difference. I believe they've done quite a bit of work over the last four weeks but don't have a bill to share yet, we're current as far as I can tell. The project manager is Management Performance Associates and the architect is Larson & Darby. All dollars are being paid out of Bel-Wood fund.