Kane County finance panel warned reserves are shrinking; committee approves multiple budget and personnel motions

Bill Leonard, chair of the Kane County Finance Committee, presided Wednesday as Treasurer Lawson and county finance staff briefed the committee on cash balances, investment returns and pending audit work, and the panel approved a series of budget and personnel resolutions.

Treasurer Lawson told the committee that cash on hand has dropped from roughly $441 million a year ago to about $411 million now, a decline he said would reduce annual investment income if it continues. "The difference of 30,000,000 a year, you know, what does that mean at 5% return on investment? You'll have $1,500,000 less than you did last year," Lawson said. He warned that using reserves reduces the county's spending capacity until property-tax receipts resume in the spring.

The treasurer also highlighted recent investment performance: aggregate portfolio yields have improved versus benchmarks, and he said the county's pooled portfolios — managed by firms such as Vector and PFMAM — show yields in the mid-4% range. Lawson noted the mortgage-backed securities in the portfolio are "guaranteed by the federal government," and that unrealized market losses reported for some holdings are the product of rising interest rates since purchase.

Kane County finance director Miss Hopkinson (presentation slides on file) gave a detailed accounting of 2024 closeout activity and preliminary audit work. She said auditors were on-site this week for field work and will return in March for final procedures. Hopkinson described countywide budget results she called largely positive: reimbursements came in above budget — in part from KDOT-related federal/state reimbursements — while many capital and contractual line items remained underspent and will be carried forward or posted as adjustments during closeout. She warned that the county's ARPA (American Rescue Plan Act) money is being recategorized and will decline as it is spent; she reported about $46 million in ARPA cash remains and must be spent by Dec. 31, 2026.

Hopkinson also walked the committee through the county's health-insurance internal service fund. She said the fund balance has increased in recent years and that the broker recommends a target expressed as a percentage of expenses; committee members cautioned against treating that balance as available for general fund purposes.

Committee members pressed for clearer rules on how interest income is allocated and spent. Several members, including Mr. Surges and Miss Bates, asked whether investment interest already distributed to operating departments could instead be aggregated and used strategically. Miss Bates said, "As I recall last year ... the interest was prorated across the departments based on their amount of reserves." Lawson and others said county practice historically posts interest by journal entry across many funds; Hopkinson noted legal guidance and a preliminary opinion from the state's attorney's office are under review and staff will pursue a precise written opinion on what interest may be aggregated.

The committee also discussed an interfund loan request tied to grant timing in the Office of Community Relations (OCR). Members debated whether the originally authorized $1.2 million line should be reduced; the resolution before the committee set a $600,000 reimbursement for 2025. Members raised the potential burn rate of OCR programs and recent short-term federal-funding pauses (staff referenced a White House memo and a temporary judicial stay) as context for the loan discussion.

Public comment at the start of the meeting included one speaker, Michelle Betag of St. Charles, who criticized a proposed 0.75% retail sales tax increase and urged fiscal restraint. "On April 1, there is a point 75% sales tax, retail tax that you want to, nail the Kane County citizens with," Betag said.

Votes at a glance

The committee moved dozens of budget, personnel and procurement items to the next level (executive committee or full board) during the meeting. Key actions (resolution numbers and amounts as stated in the meeting record): - Res. 25-143 — Coroner's collective-bargaining agreement: $19,905.11 added for FY24 and $27,407.08 for 2025 (total $47,312.19). Motion moved by Sanchez; committee approved. - Res. 25-112 — Sheriff's security officers collective-bargaining agreement (three-year deal: +6% in 2024, +3% in 2025, +3% in 2026). Motion moved by Serge; committee approved. - Res. (strategic planning services) 133 — $127,500 budgeted for 2025. Motion moved by Sanchez. The committee debated the timing; the motion carried with two "no" votes. - Res. (external audit costs) — budgeted amount (noted as $1,000 in the packet); committee approved moving forward with the auditor presentation to follow in closed session. - Res. 25-098 — Animal-control administration increase: $16,703.66. Motion moved by Sanchez; approved (one recorded "no" vote by Surges earlier in the roll calls for a different item; committee record shows approval for this item with the roll called). - Res. 25-141 — Interfund community-investment loan reimbursement: $600,000 for 2025. Motion moved by Sanchez; committee approved this reduction from the earlier $1.2 million authorization and forwarded the item for further consideration. - Multiple transfers to the general fund and fund closeouts (examples): Res. 25-138 — transfer back to general fund $155,187.67; Res. 25-139 — transfer of interest earned from Coronavirus Relief Fund $80,243; Res. 25-140 — vaccination expense FEMA reimbursement transfer $555,816.64. Motions moved by Sanchez (or deputy as noted); approved. - Res. 25-142 — Election judges/workers: $1,153,410 moved from contractual to personnel services (budgeted). Motion moved by Sanchez; approved. - Res. 25-038 — Disability/accessibility grant: $8,412.35 from the Supreme Court allocation. Motion moved by Deputy; approved. - Dozens of procurement-card authorizations: the committee approved requests for procurement cards for multiple departments (amounts per department ranged from $2,500 to $45,000 maximum per card depending on department). Committee and staff confirmed cards are credit cards with single-purchase and total-cycle limits; county auditor reported cards are paid off monthly and the county has not recently incurred interest on these accounts. - Final housekeeping resolution: expense voucher Res. 25-110 for $86.63 (ISACO luncheon) — committee approved and members asked to schedule a policy discussion on event/reimbursement guidelines.

All of the above motions that appeared on the meeting agenda were approved by roll call unless otherwise noted; several items will be forwarded to the executive committee or full county board for final action as required by county rules.

Why this matters

Committee members said the combination of a reduced cash base and historically high interest-rate earnings creates a near-term choice: either continue allocating interest back to many departments via pro rata journal entries or legally aggregate legally available interest to address large budgetary needs. Staff promised to return with precise legal guidance from the state's attorney and with follow-up analysis on interest-allocation options and proposed next steps for fund closeouts and ARPA classifications.

Next steps and context

Hopkinson said auditors will return in March to finish field work and that finance staff will post remaining bank reconciliations and interest allocations as part of the 2024 closeout. The interfund loan and several transfers approved by the committee will advance to the executive committee and the full county board for final authorization. The committee scheduled a policy follow-up on reimbursement guidelines for travel and small-event expenses.

Ending

Chair Leonard closed the public portion of the meeting by asking staff to proceed with the external-auditor presentation in executive session; the committee returned to open session later and approved closed-session minutes and adjourned.