ULSTER COUNTY

COMPTROLLERS OFFICE
Elliott Auerbach, Comptroller

July 1- September 30, 2014

3rd Quarter 2014

The mission of the Ulster County Comptrollers Office is to serve as an independent agency of the people and to protect the
public interest by monitoring County government and to assess and report on the degree to which its operation is economical,
efficient and its financial condition sound.

Comptrollers Quarterly Reports

The Ulster County Charter C-57(I) charges the Office of the Ulster County Comptroller
with submitting reports on the financial condition, efficiency, and management of the
Countys finances, at least quarterly, to the County Legislature and Executive, and posting
those reports on the County website. In furtherance of this charge, our Office regularly
produces reports and audits which reflect upon the Countys financial condition and the
efficiency of its management, with the goal of informing Ulster taxpayers as to the issues
which impact the expenditure of their tax dollars. All of our Offices reports and audits are
posted on our website at youreyesonulster.com.
Notwithstanding the regularity of such reports throughout the year, it is our Offices
practice to produce a Quarterly Report which highlights particular financial issues or
advises on timely topics impacting taxpayers. This report continues our focus on widely
recognized financial indicators pertinent to Ulster County.
Expenditure Indicators
The goal of any government is to provide needed services and public infrastructure
investment at the lowest cost possible to obtain the desired outcome without incurring
undue debt. Numbers alone cannot speak to how well these goals are being met, but do
provide an indication of per capita debt and spending as well as analytics that can be
evaluated and compared to similar municipalities.
Expenditures occur at every level of government, from local towns to federal organizations.
They can be a rough measure of a local governments service output.
Which services, and to what extent government should provide them, are policy
considerations which have long fostered debate as to the fundamental goal and size of
government in our society. But it may be said without controversy that not all basic needs
are met by the private sector. Some goods and services may not be produced at all, while
others may not be produced in sufficient quantity or at an affordable price for all citizens.
Much of government expenditures bridge that gap. An example is the creation and
maintenance of police and emergency organizations. These operations are funded by
federal and regional government funds in order to provide safety from crime and disasters.
Other examples include programs such as health care, supplemental nutrition, and housing
assistance. Public education and public transportation infrastructure are also main
expenses. Generally, the more a government spends the more services it provides.
Local governments are required to submit a balanced budget and therefore it might seem
unlikely that growth in expenditures would exceed revenue growth; however, there are
several ways an annual budget can be balanced creating a future imbalance in which
expenditure obligations and disbursements grow faster than revenues. One of the most
difficult challenges of local government budgeting is the reality of unfunded state
mandates. Some of the most common methods used to balance these "unbalanced"
conditions are to borrow, use reserves, use bond proceeds for operations, or funnel small
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amounts from intergovernmental grants. The annual budget can remain balanced in each
scenario, but the long-run budget develops a deficit. This can be considered a risky way to
operate.
Expenditures Per Capita
Per capita expenditures reflect changes in expenditures relative to changes in population.
As population increases, and the related expenses of providing services to a larger
population increase, per capita expenditures should remain relatively constant. If the
indicator is trending differently, it may indicate that the cost of providing services is
increasing in an unsustainable manner or that service levels, or productivity, are
decreasing.
Ulster County's Operating expenditures per capita
$1,900
$1,700
Net operating
expenditures per
capita (constant
dollars)

$1,500
$1,300
$1,100

Net operating
expenditures per
capita (current
dollar)

$900
$700
$500
2009

2010

2011

2012

2013

This graph illustrates the operating expenditures per capita, highlighting the impact of
inflation in terms of constant dollars and current dollars. This indicator exhibits a positive
trend for Ulster County as it remains fairly constant over the five year period. Per capita
expenditures should focus first on total expenditures and then on changes in individual
expenditure categories.
Expenditures by Function
Expenditures can be evaluated based on fund, function, or organizational unit. Analyzing
your governments expenditures can help identify if problems exist. The expenditure
profile over the past five years can indicate if excessive growth in overall expenditures has
occurred, if there is an onset of an undesirable increase in fixed costs, if the current
budgetary controls are effective, and it can present issues in programs that may create
future liabilities.

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%
15.07%
8.51%
7.30%
7.84%
34.92%
10.64%
15.72%

2010
$
%
50,274,131 16.46%
27,061,892
8.86%
21,796,446
7.13%
27,987,144
9.16%
108,154,316 35.40%
39,806,712 13.03%
30,407,830
9.95%

2011
$
50,173,121
27,496,698
19,923,701
32,099,024
109,659,229
40,102,026
28,464,346

%
16.29%
8.93%
6.47%
10.42%
35.61%
13.02%
9.24%

2012
$
%
51,488,843 16.10%
27,712,159
8.66%
18,217,111
5.70%
26,165,483
8.18%
119,678,854 37.42%
45,749,685 14.30%
30,820,737
9.64%

2013
% Change
$
%
2013-2009
47,344,673 14.80%
-2%
29,127,814
9.11%
7%
14,744,280
4.61%
-37%
27,487,034
8.59%
10%
125,641,918 39.28%
12%
49,251,747 15.40%
44%
26,301,015
8.22%
-48%

Total Expenditures 320,314,680 100.00%

305,488,471 100.00%

307,918,145 100.00%

319,832,872 100.00%

319,898,480 100.00%

Expenditures
General government
Public safety
Public health
Transportation
Economic assistance
Employee benefits
Other

2009
$
48,267,003
27,249,930
23,393,390
25,101,511
111,864,712
34,087,256
50,350,878

The previous table details expenditures by function over a five year period. Overall, total
expenditures during the past five years remained fairly steady, with a percentage change
ranging from a decrease of 5% in 2010 to an increase by 4% in 2012 and little to no change
for 2013.

Debt Service (P&I),

4%

Home and
community, 1%
Employee
benefits, 15%

Culture and
recreation, 0.23%

General
government, 15%

Operating
Expenditures 2013

Education, 3%

Public Safety, 9%

Economic assistance,
39%

Public Health, 5%

Transportation, 9%

Operating
Expenditures 2009

Debt Service (P&I),

11%

General
government, 15%

Home and
community, 1%
Culture and
recreation, 0.30%

Employee
benefits, 15%

Economic assistance,
35%

Education, 3%

Public Safety, 9%

Public Health, 7%

Transportation, 8%

These charts depict that the structure of the expenditures remains relatively fixed.
However, several of the function components have experienced significant changes. Public
Health, which monitors the populations health, develops policy and advocates for
vulnerable members of the community, has diminished over the past five years, spending
has decreased by $8.6 million from 2009 to 2013. This is largely attributable to Countywide consolidation of services and contracting with private-sector agencies to provide
these types of services.
Employee benefits have experienced significant changes as well, with a 44% increase from
2009-2013. This increase in employee benefits is largely due to an increase in state
retirement contributions as well as an increase in hospital and medical insurance costs.
The expenditure category termed other also shows a major decrease in the five year
delta, the biggest component within this category being the debt service expense, which
reflects an increase of nearly 65% from 2009. The figures for 2009 can be fairly misleading
as it includes $12 million of defeased debt,1 with $11.7 million of proceeds from obligations
which are not accounted for in this table. Taking this into consideration, the 2009 number
falls into alignment with the following years.
1

A provision that voids a bond or loan when the borrower sets aside cash or bonds sufficient enough to service the
borrower's debt.

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Fringe Benefits
Public employees salaries and benefits are a significant portion of a local governments
expenditures. Personnel costs account for approximately over 35% of Ulster Countys
expenditures. On average, non-salary employee benefits (i.e. fringe benefits) equaled $43.5
million over the five year period. The most common forms of fringe benefits include health
and life insurance, disability insurance, and pension plans. Substantial shares of operating
costs can be attributed to these benefit expenditures.
The funding and recording of fringe benefits is a complex process which can allow for costs
to escalate undetected, straining a governments finances. Fringe benefits have different
payout schedules: health and life insurance - require immediate cash outlays; pension
benefits can be deferred for many years.

Budet to Actual Employee Benefits Comparison

$60,000,000.00
$55,000,000.00
$50,000,000.00
$45,000,000.00

Budget

$40,000,000.00

Actual

$35,000,000.00
$30,000,000.00
$25,000,000.00
2009

2010

2011

2012

2013

The warning trend for this indicator is exhibited by increasing fringe benefit expenditures
as a percentage of salaries and wages. Below is a table and chart showing that, although
slight, this expenditure indicator is displaying some warning patterns as salaries and wages
decrease while the fringe benefit costs nevertheless continue to rise.
Description
Expenditures
for fringe
benefits
Salaries and
wages
Fringe benefit
expenditures as
a percentage of
salaries and
wages

2009

2010

Fiscal year data

2011

2012

2013

34,087,256

39,806,712

40,102,026

45,749,685

46,195,493

71,308,949

71,390,541

68,609,380

68,099,615

66,355,092

55.76%

58.45%

67.18%

69.62%

47.80%

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Fringe Benefits
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000

Expenditures for fringe benefits

$30,000,000

Salaries and wages

$20,000,000
$10,000,000
$2009

2010

2011

2012

2013

This graph illustrates that salaries decline as the expenditures for fringe benefits steadily
increase. Salaries decreased by $4.9 million whereas fringe benefits increased by $12
million from 2009 to 2013.
The table below shows certain specific benefits expenditures for the five year period
referenced. As can be seen, unemployment insurance has contributed significantly to the
rise in expenditures. The 432% increase is largely an anomaly which can be attributed to
the layoff of approximately 350 workers in connection with the June, 2013 sale of the
Golden Hill nursing facility. The sale of the facility had counterbalancing financial benefits
to the County which are beyond the scope of this report. The other significant increase is in
state retirement expenditures, which, as noted generally above, is a reflection of a
continuing trend of the rising costs of public sector benefits even where aggregate salaries
decrease, a public sector challenge which is the subject of spirited debate and may be met
with creative solutions in the near future.
Exependiture Category
State Retirement
Social Security
Unemployment Insurance
Disability Insurance
Hospital and Medical Insurance
Other Employee Benefits
Total Employee Benefits

5 Year
2009
2010
2011
2012
2013
Trend (%)
7,545,002.00
10,254,823.00
13,494,253.00
16,940,613.00
17,149,338.00
127%
7,166,816.00
7,123,819.00
6,843,388.00
6,707,436.00
6,163,625.00
-14%
160,427.00
267,551.00
163,140.00
189,102.00
852,982.00
432%
202,300.00
188,494.00
208,792.00
203,954.00
118,653.00
-41%
19,482,563.00
22,317,267.00
19,626,120.00
21,774,470.00
21,381,870.00
10%
1,338,647.00
1,840,137.00
1,934,392.00
1,971,907.00
1,998,705.00
49%
$ 35,895,755.00 $ 41,992,091.00 $ 42,270,085.00 $ 47,787,482.00 $ 47,665,173.00
33%

Expenditures to Budget Analysis

Budgeting is a technique for setting an organizations priorities by allocating scarce
resources to those activities that are considered most important. As the focal point for key
resource decisions, the budget process is a powerful tool. The quality of decisions resulting
from the budget process and the level of their acceptance depends on the characteristics of
the budget process. According to the Government Finance Officers Association, a good
budget process is far more than the preparation of a legal document that appropriates
funds for a series of line items. Good budgeting is a broadly defined process that has
political, managerial, planning, communication, and financial dimensions.
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Budgets are meant to balance revenues and expenditures, so that a local government is
able to provide needed services with the resources available. However, the reality is that
budgets rarely work out precisely as planned, leading to operating deficits or operating
surpluses. As long as these deficits or surpluses are minor or intermittent, they do not
constitute a material problem for the local government and should not be cause for
concern. It is when there is a persistent pattern of large surpluses or deficits that there
should be concern about the budgeting practices of the government.
In the 2nd quarter report, we called attention to the significant gap between the original
budgetary expectations and the actual results concerning the revenue category. The same
must be done for the expenditures. Following is a table and graph depicting the difference
between the budgeted expenses appropriated to the actual expenditures for 2009 through
2013.

Net Operating
Expenditures
(Actual)
Net Operating
Expenditures
(Budget)
Difference
Difference as a %

2009

2010

2011

2012

2013

320,314,680

305,488,471

307,918,145

319,832,872

319,898,481

340,336,859 344,330,897 347,409,113 358,284,663 355,346,735

(20,022,179) (38,842,426) (39,490,968) (38,451,791) (35,448,254)
-6%
-13%
-13%
-12%
-11%

Budget v. Actual Expenditures as %

0%
2009

2010

2011

2012

2013

-2%
-4%
-6%
-8%
-10%
-12%
-14%

Each year the expenditures have been over-budgeted. Coupling this with the technique of
under-budgeting revenues can result in the raising of un-needed funds. Underestimated
revenues and overestimated appropriations subsequently lead to an accumulated fund
balance and can be misleading to taxpayers. It can significantly impact the Countys yearend balance and financial condition.

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Conclusion
The data presented herein relies upon the accuracy of Ulster County and national data
available at the time of its preparation. This report is intended to inform taxpayers and
local officials of general trends and Ulsters positioning in the midst of those trends. Future
reports will continue to identify fiscal and performance issues relevant to the effective
operation of government, with a constant goal of encouraging educated public discourse
and decision making by voters and policy makers in Ulster County.

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