Cumberland Times-News

Opinion

June 11, 2014

Stable fund balance benefits Allegany County

— In February 2013, representatives from Allegany County government participated in credit presentations to Standard and Poor’s and Moody’s rating agencies.

The purpose of these presentations was to prepare the county for the eventual refinancing of our debt to take advantage of record low interest rates.

As publicly reported, this effort proved very beneficial to county taxpayers as our bond rating was upgraded by both S&P and Moody’s. The bond rating is directly related to the interest rate the county pays on its debt.

As a result of these upgrades, the county was able to save approximately $1 million on its outstanding debt, while at the same time, reducing our payment terms.

As we prepared the Fiscal Year 2015 budget, one of the items that was discussed during a February public work session was the county’s fund balance.

During our credit presentations it was made abundantly clear by the rating agencies that maintaining a fund balance of no less than two months of general fund revenues is vitally important.

We informed the agencies that we had committed a portion of our fund balance to cover two years-worth of the teacher’s pension liability.

Having done so, we are pleased to report that we have slightly more than two months of general fund revenue in our fund balance.  

Although this is a major achievement for a small rural county, Allegany County’s fund balance is still slightly below the national median for similarly rated communities. In recent years we have maintained our commitment of not using fund balance to prepare our budgets, as we are working hard to live within our means.  

This decision will pay dividends in the form of lower borrowing costs and greater flexibility in the future.

Please note, we are committed to following this strategy so that we can maintain our bond rating as we prepare to borrow money for the new Allegany High School early in 2015.  

The county’s approach has proven effective as we have been rewarded with another rating upgrade from S&P early this year.

According to S&P “The stable outlook reflects Standard & Poor’s opinion of the county’s strong financial flexibility and liquidity, which improved throughout the recession due to, what Standard & Poor’s regards as conservative budgeting and management’s willingness to cut expenditures to maintain balanced operations.”

Consistently using fund balance to pay current bills and balance future budgets is not in the best interest of Allegany County and its taxpayers.

Doing so will only contribute to financial instability in the future. We will continue to live within our means, while every taxpayer in the county is forced to do the same.        

David A. Eberly

Allegany County administrato
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