What is the Fiscal Year?
Like many governmental entities, the Mecklenburg County Finance Department operates on an annual financial year which is distinct from the calendar year (January 1st - December 31st). Mecklenburg County's annual fiscal year runs from July 1st to June 30th. For example, Fiscal Year 2003 begins on 7-1-2002 and ends on 6-30-2003.
What is the Payroll Cycle?
Mecklenburg County employees are compensated on a bi-weekly schedule. The pay period is divided into two distinct weeks, the first beginning on Wednesday and concluding on the following Tuesday, and the second beginning the next Wednesday and concluding the following Tuesday. For more details regarding employee compensation, please contact the Human Resources Department.
Do we get Audited?
Yes. Mecklenburg County is audited by an independent external auditing firm on a yearly basis. The auditor's opinion letter is published annually in the Comprehensive Annual Financial Report (available under the Financial Documents section). For additional information regarding the audit process, please consult the Auditor Selection Policy below.
What is our Auditor Selection Policy?
Mecklenburg County is required by North Carolina statutes to have an independent audit of its general financial statements conducted by a Certified Public Accountant. Mecklenburg County has had for many years an Internal Audit Department, and the Government Finance Officers Association (GFOA) has approved a recommended practice for establishing an Audit Committee. In addition, the Mecklenburg County Board of Commissioners has determined that it is desirable to establish an Audit Review Committee as suggested by the GFOA.
The Mecklenburg County Board of Commissioners established an Audit Review Committee (ARC) as follows:
The primary duty of the ARC is to oversee the independent audit, recommend selection of the independent auditor and approve of audit findings; and
The ARC shall have access to cyclical and closing audits produced by the Internal Audit Department; and
The ARC will be comprised of five members appointed by the Board of County Commissioners - two members of the Board of County Commissioners, one from each party, appointed each December, two members of the management staff and one outside person appointed through the advisory board appointment process; and
The ARC collectively should have expertise and experience in accounting, auditing in financial reporting and internal controls.
What is our Debt Policy?
The purpose of the Mecklenburg County Debt Policy is to provide guidelines, parameters and procedural requirements for the issuance and management of debt. Many of the processes for approval, sale and repayment of debt are controlled by various North Carolina statutes. These laws and regulations which provide debt policy for most North Carolina local governments are not repeated here. However, this policy must be considered in conjunction with those laws.
Use of Debt Financing - Debt is only to be incurred for financing capital assets that, because of their long-term nature or because of budgetary constraints, cannot be acquired from current or budgeted resources. Debt is not used for operational needs. Debt financing can include general obligation bonds, revenue bonds, certificates of participation, lease/purchase agreements, special obligation bonds, or any other financing instrument allowed under North Carolina general statutes. Mecklenburg County will seek to utilize the least costly, most appropriate form of financing for its project needs.
Capital Planning & Debt Determination - The Citizens Capital Budget Advisory Committee (CCBAC), appointed by the Board of County Commissioners, reviews department and outside agency capital requests and makes a Capital Improvement Program recommendation. The Board then approves both a ten-year needs assessment and a three-year Capital Improvement Program.Debt financing will be considered in conjunction with the approval by the Board of County Commissioners of the County's Capital Improvement Program.
Additionally, lease/purchase debt financing will be considered for equipment items which are included in departmental requests.
The County will fully utilize the non-voted (two-thirds) authorization for General Obligation Bonds allowed under North Carolina law. Most voted authorizations will be scheduled for referendum in November of odd numbered years at the time of the general election, unless such approval must be sought for emergency purposes.
Debt Affordability - The County will use an objective, analytical approach to determine the amount of debt to be considered for authorization and issuance. This process involves the comparison of generally accepted standards of affordability to the current County values. These standards shall include the following:
Debt per capita
Debt as percentage of assessed valuation
Debt service as percentage of operational budget
Debt service as percentage of "local revenues"
This process shall also be judged against the necessity of and the benefits derived from the proposed acquisitions.
The County shall strive to achieve and/or maintain these standards in a moderate to average classification, with comparison to governments of similar size, operations, and community characteristics, with a primary focus on similarly rated and geographically close counties. The comparison will include other North Carolina urban counties, and similarly sized counties nation-wide.
Debt Structure - For most debt issues, the actual structure and sale is conducted in conjunction with the Local Government Commission (LGC), a division of the Office of the State Treasurer. The LGC functions as the financial advisor to local governments when issuing debt. Structuring must take into consideration current conditions and practices in the municipal finance market.
Debt will be paid off in a timeframe that is less than the useful life of the asset or project acquired through the financing. General obligation bonds will be generally competitively bid. Negotiated or private placements, however, may be used where allowed when complex financing or structure is a concern with regard to marketability. Debt service for each issue will be structured in an attempt to level out the County's total debt service payments. Average life of bonds will be no more than 12 years, which results in approximately 60% of the County's debt being repaid within ten years. This structuring assists in minimizing the interest payments over the life of the issue.
The County will consider utilization of variable rate debt in order to lessen the potential interest costs over the life of the issue.
The size of the bond sale will be determined by the County, based on expected cash needs for construction or acquisition of projects for a period of approximately 18 to 24 months.
This will enable the County to maintain the capability to utilize the non-voted debt provision, and accommodate necessary spending requirements to minimize arbitrage rebates.
The size of other types of financings will be determined by the cost of the assets being acquired, including all issuance costs. The time of the sale will be determined based on existing cash balances from previous financings, acquisition and construction cash draw down requirements, and expectations of needs for new projects to be funded by the financing.
Credit Rating - The County will seek to maintain its current triple-A rating on its general obligation debt and maintain the highest possible ratings on other financing instruments, if rated. Credit enhancements will only be used when necessary for cost-effectiveness and/or marketability. The County will maintain good communications with bond rating agencies about its financial condition and operations, with information being sent to the rating agencies on a regular basis. Credit ratings will be sought from the major, national rating agencies.
Refunding of Outstanding Debt - The County will monitor the municipal bond market for opportunities to obtain interest savings by refunding or advance refunding outstanding debt. The estimation of net present savings should be, at a minimum, in the range of 2.5 - 3%, of the refunded maturities before a refunding process begins.
Arbitrage Rebate Reporting & Covenant Compliance - The County will maintain a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code. This effort includes tracking investment earnings on bond proceeds, calculating rebate payments in compliance with tax law, and remitting rebatable earnings to the federal government in a timely manner in order to preserve the tax-exempt status of the County's outstanding debt issues.
Additionally, general financial reporting and certification requirements included in debt issue documents are monitored to ensure compliance with all covenants.
Continuing Disclosure - The County will provide on-going disclosure information to established national information repositories and maintain compliance with disclosure standards promulgated by state and national regulatory agencies.
Selection of Financial Consultants and Service Providers - The County will provide for a solicitation and selection process for securing all professional services required in connection with any debt issues. This selection will be done on an issue-by-issue basis, will focus on the particular experience and expertise necessary for that issue, and will be made in order to secure such services at competitive prices to the County.
The Board has a selection process and appointment criteria already established for bond counsel.
Administration and Implementation - The County Manager and the Director of Finance are responsible for the administration and issuance of debt including the completion of specific tasks and responsibilities included in this policy.
What is our Banking Policy?
The Finance Department is responsible for the administration of County finances in accordance with State laws and budget ordinances established by the County Commissioners.
Mecklenburg County will maintain the following banking activities:
General Operating Account
Payroll Account
Department of Social Services
All of these banking activities will be acquired through a competitive bid process (RFP).
All banks with offices in Mecklenburg County are invited to bid for the accounts every two years. Bidding encourages competitiveness among the banks and results in lower costs and higher quality of service to the County. The bid process is totally objective, non-partisan, and non-discriminatory. The accounts are awarded for a two-year period, beginning July 1 of the appropriate year.
Services to be provided to accounts by the bank are fully outlined in each bid.
Proceeds from the sale of bonds are deposited into the General Operating Account. These proceeds are used for investment purposes in accordance with the County's investment program. Maturities of such investments and disbursements for the related bond projects are processed through the General Operating Account through normal operations.
What is our Fund Balance Policy?
The General Fund undesignated fund balance will be maintained at a level sufficient to provide for the required resources to meet operating cost needs, to allow for unforeseen needs of an emergency nature, and to permit orderly adjustment to changes resulting from fluctuations of revenue sources. Based on the recommendation of the State Treasurer's Office, Mecklenburg County will maintain at least 8% of the next year's budget, net of Federal and State pass-through revenues, in the undesignated fund balance.
Any amounts remaining in the fiscal year-end undesignated fund balance in excess of 8% of the approved subsequent year's budget, excluding Federal and State pass-through revenue, shall be designated for subsequent year's expenditures and shall be maintained by the Director of Finance in a separate interest bearing account. This excess amount, along with the interest earned thereon, will be available for appropriation by the Board of Commissioners in a subsequent fiscal year to fund capital, operating, or debt service expenditures as determined by the Board of Commissioners during the budget for that subsequent fiscal year. Primary emphasis will be placed upon 'evening out' peaks and valleys for debt service requirements.
How can I get a copy of our Official Statement?
To receive a copy of Mecklenburg County's Official Statement, please contact the Local Government Commission at 325 N. Salisbury Street, Raleigh, NC 27603-1388, (919) 807-2360.
What is our Bond Rating?
Mecklenburg County currently has a Triple-A rating on general obligation bonds, the highest possible, from Standard & Poor's, Fitch, and Moody's Investors Service.
In What do we Invest?
North Carolina General Statute 159 authorizes the County to invest in obligations of the U.S. Treasury; obligations of any agency of the United States of America, provided the payment of principal and interest of such obligations is fully guaranteed by the United States; obligations of certain quasi-federal agencies; commercial paper bearing the highest credit rating available; bankers' acceptances of accepting banks or holding companies either (i) incorporated in the State of North Carolina, or (ii) having the highest available long-term debt rating; and the North Carolina Capital Management Trust, a SEC (2a-7) registered mutual fund.
When is the next Bond Sale?
The dates of Bond sales are determined by assessing cash flow needs of the Capital Improvement Program. The date of the bond sale is set by the Director of Finance in consultation with the Local Government Commission. The next bond sale will be held January, 2004 in an amount to be determined by the Board of County Commissioners. If interested in purchasing bonds issued by Mecklenburg County, please contact a stock broker or a securities trader.
If you have any additional questions that are not addressed, please email mcbraar@co.mecklenburg.nc.us for a detailed response. Please reference the Finance Department web page in the subject line of your message.
