“Double Rumor Alert:
Rumor 1 - The wasteful spending of the BOS has depleted all of our cash and financial reserve funds.
Fact - The Unreserved Fund at $13,925,333 is higher than it was when I started in FY 2010. The FY17 year end cash balance of $16,935,211 is over $3 million greater than it was in FY10.
Rumor 2 - The County will pay a high interest rate or not be able to borrow money for projects because the BOS never paid to get a County bond rating.
Fact - Greene has always been able to obtain the lowest finance rate by participating in the pooled bond funds offered by the State. The $28 million school facilities bond was approved on Monday (10/17) at the lowest possible rate by the State VSPA bond pool. This bond was approved with out the County having an individual bond rating. It can cost as much as $80,000 to get a bond rating and it does not make sense to spend that money unless it is required.
In summary, the sky is not falling!" - Jim Frydl
Facts & Reality Conflict with Both his Claims and County Policy
Supervisor Frydl’s claims conflict with his own public statements, use misleading figures, and ignore the public statements of Stantec/Davenport Associates regarding financing the White Run Reservoir project. Let’s address them here:
This is a “red herring”, i.e., tossing out false hyperbolic statements in an attempt to label his opponents as uninformed and unfair. “Wasteful spending”, while certainly possible, has not been addressed by his opponents. The actual claims are that the BoS has routinely budgeted expenditures above revenues and each year the income budget includes increasing transfers from the “Reserve Fund” to balance the budget. The adopted 2018 budget includes “Appropriation from Reserve Fund: $4,172,590”.
In 2012 the BoS adopted a Reserve Fund policy that requires “15% of General Fund Expenditures plus one-month average cash flow” be maintained as a minimum reserve unless the BoS declares an emergency. Since 2014 the BoS has failed to maintain reserves according to its own policy, with minimum cash balances in FY 2017 dipping to below 50% of the policy requirement. For the 2018 budget this would mean a minimum reserve fund of approximately $14.3M.
Mr. Frydl reports nearly $17M cash available at the end of June 2017 without telling us it is a peak revenue period as semi-annual property tax bills are paid. Average cash on hand throughout 2017 was a little under $9M, well below the BoS policy formula that called for $13.6M minimum reserve fund balance for FY 2107.
So how seriously does Supervisor Frydl take the task of following BoS policy and maintaining the prescribed reserve? At a recent BOS meeting Supervisor Frydl lectured against those who argue for maintaining a 3 month cash reserve (policy calls for 15% plus 1 month, or just under 3 months minimum reserve). He said actually meeting that requirement would cause Greene County services to be curtailed (eliminating the Sheriff’s entire budget wouldn’t be enough he said) or require a large tax increase. Having already spent the money mandated for the reserve was described as virtuous as the money was “the people’s money”. So much for that BoS policy passed in 2012, violated in 2014 and increasingly so ever since.
The following graph represents the disparity between the reserve-NEED (per the policy), versus the cash available required to back up the NEED, since 2010. NEVER did available cash reach $17M.
Mr. Frydl reports as a false rumor that the county will have to “pay a high interest rate or not be able to borrow money for projects because the BoS never paid to get a County bond rating.” He then repeats his usual claim, echoed throughout his years as a Supervisor, that the county can get along well without a bond rating. After all, the $28M school loan was obtained at favorable rates from the state school funding organization. [NOTE: The School-funding State entity is different from the State entity handling capital projects like White Run Reservoir Project]
Mr. Frydl’s issue is not so much with his opponents as it is with the financial experts hired by the County some 20 months ago to rehabilitate the County’s fiscal standing so that it would be possible to obtain White Run funding at an affordable rate. The experts say interest rates would be about 4.5% with a bond rating, 7.5% without. The experts say the State funding organization for a project like White Run would not back a loan without Greene getting a bond rating, and then maybe not even then because the County has no history of funding such capital projects primarily from user fees, not general taxpayer funding. That is considered a poor fiscal practice by lenders. The experts estimated in the public meeting in July 2017 that although they had been working already for about 18 months no changes had been made to County or RSA policies to address the issue, and as much as two more years may be required to make Greene County fiscal performance acceptable to lenders.
One issue raised by the financial experts was the failure of the RSA consumer rates to pay for the debt incurred to build the existing system, or to accumulate any capital improvement funds for the exact situation Greene taxpayers face now; an old, obsolete system operating at or above capacity. Mr. Frydl called it a 40-year failure by RSA in a Greene County Record article in July 2017. Ironically, during his two terms, Mr. Frydl has been a Greene County BoS representative on the RSA Board of Directors where rates structure could have been addressed but wasn’t. Since approval of the permit for the project six years ago on Mr. Frydl’s watch, Greene County has also not taken any steps to build a capital fund for the project. Mr. Frydl has known about White Run his entire two terms, but has failed to take common sense steps, according to the Stantec/Davenport Associates financial experts, to prepare for financing the project, now a critical need if BoS touted growth projections are correct.
Finally, the BoS is tight- lipped about what comes after the White Run water system capacity is tripled and there is no delivery system or waste treatment system to accept the flow. There is also no source identified to fund the $7.25M liability that exists because 725 EDU’s were sold and the money spent on debt service.
Mr. Frydl’s claim that “the sky is not falling” remains to be seen. One thing is clear though. The financial expert’s assessment is that his fiscal policies are incompatible with sound government and he still defends them to the end.
Greene County, VA
Originally published in 4goodgov.com