Berrien County to balance budget using reserve funds
Published 2:56 pm Thursday, August 25, 2022
ST. JOSEPH — Berrien County Commissioners discussed and approved a budget amendment for the 2022 budget at their meeting Thursday morning. That budget amendment calls for the county to use more of its reserves to balance the budget, primarily to cover rising health insurance costs.
Berrien County Finance Director Doug James outlined the changes at the board’s Committee of the Whole meeting earlier Thursday before the board action at their regular meeting. James had previously made the same presentation to the board’s finance committee.
Overall, the biggest change to the budget is the use of $2.4 million more than anticipated out of the county’s fund balance. The county now expects total revenue to be $71.899 million and expenditures to be $75.611 million which would use a total of $3.712 million out of reserves. The original budget used a fund balance amount of $1.255 million.
James told commissioners that the main reason for having to use more of the county’s reserves to balance the budget is the unanticipated rise in health care costs. Additionally, the county has had to address changes to the delinquent tax revolving surplus fund, capital improvement project costs and budgeting American Rescue Plan Act funds.
“We need to transfer money to support the health insurance fund,” he said. “We have had rising costs and stagnant revenue. We started infusing cash into this fund in 2019 and we’re asking for more money now to get us to slightly above break even.”
He attributed the rising costs to a number of factors, mostly related to the pandemic. He said that the pandemic caused people to defer treatments in 2020 and 2021 to this year which drove up costs. Similarly, people deferred preventative treatment visits until this year, also driving up costs.
James also mentioned the rising medical costs due to inflation. The county has seen medical related insurance costs go up by 22 percent in the last 12 months with drug costs going up 14 percent. He said that experts expect costs to flatten in the next 12 months.
Steps taken to address the situation include offering Medicare Advantage plans to county retirees. County Administrator Brian Dissette said that Medicare Advantage doesn’t harm retirees as it actually costs less to them while giving more benefits.
County Commissioner Ezra Scott noted that the county is down around 80 employees with vacancies not filled which means less people are paying into the funds which in turn creates the shortfall.
James reported that another issue is that ARPA and other pandemic related funding received by the county are not recognized as revenue coming in until the funds are actually spent. In addition, some of those funds which were designated to cover for lost revenue can’t be used to pay for rising health care costs, he said.
“It’s part of a double whammy,” County Board Chairman McKinley Elliott said. “There’s an inability to use the funds for Covid related expenses along with the deferment of care. We’re now seeing people flooding into system all at once.”
Also at Thursday’s meeting, commissioners accepted a donation from Friends of Berrien County Animal Control to find a noise reduction project and approved employment changes at the Berrien County Road Department.