Morrow County budget officers warn of $1.6 million structural shortfall in proposed FY26 budget

Morrow County budget director Kevin Nims on Monday presented the county's proposed fiscal year 2025-26 budget and said while the overall document is balanced, the county faces an estimated $1.6 million structural deficit when one-time and nonrecurring resources are excluded.

The budget message, read by Nims on behalf of County Administrator Matthew Johnson and himself, described the proposed book as "a clear statement of our commitment to transparency, responsible financial stewardship, and long term fiscal sustainability." Nims said the proposal removes nonrecurring items such as ARPA funds, beginning fund balances and capital proceeds when measuring structural balance.

Why it matters: a structurally balanced budget means recurring costs are matched with recurring revenue. Nims told the committee that, after those exclusions, the general fund shows a net structural deficit of approximately $1.6 million for FY26 and urged measured changes over the next budget cycle rather than abrupt across-the-board cuts.

Nims listed several drivers behind the imbalance. Department-level contingency practices, where departments include separate contingency amounts on top of a general fund contingency, have created what he described as a "contingency on top of contingency" that inflates appropriations. He cited fiscal year numbers in committee discussion: general fund materials and services of about $5.6 million and personnel expenditures of roughly $9.7 million in a prior year, with FY25 year-to-date actuals showing materials and services near $7.6 million and personnel at about $13.4 million. Nims said these patterns likely allow about $1.5 million to be reduced from departmental budgets without cutting services.

The budget document includes a continuing $1 million supplemental contribution toward the county's pension unfunded liability, a practice Nims said began with surplus resources and that the county plans to continue while it works on structural fixes. Nims also reiterated his conservative revenue assumptions: for example, he excluded an anticipated $200,000 in unspecified future Kres allocations from the FY26 baseline because the revenue was not guaranteed.

Capital and reserves: the proposed budget sets aside substantial reserves for long-range capital needs. The capital improvement plan funds several projects, including design and multi-year financing for a Circuit Court building. Nims used a working project cost of $35 million for the courthouse build and said available cash and reserves, together with projected state support, position the county to cover the project if costs do not exceed that estimate.

Pension and staffing changes: the budget incorporates a countywide cost-of-living allowance of 3 percent and several modest staffing changes approved in the classification process: a 1.0 FTE conversion in weed control, a 0.8 FTE human resources assistant and one facilities maintenance position plus a 1.0 FTE legal assistant in the district attorney's office (total net FTE increase about 2.33). Nims described an operational decision to move many employees from a 401(a)-style plan into PERS-equivalent coverage for retention; the FY26 budget assumes an 11 percent employer contribution rate for those employees.

ERP and IT: the county is midstream on an enterprise resource planning replacement. Nims told the committee the originally selected vendor contract was terminated during implementation; the county plans to engage another vendor and now expects a new go-live target of July 2026. The FY26 proposal includes remaining project funding and an ongoing commitment to modernize grant accounting and human resources systems.

Next steps: the budget committee will review department budgets over the meeting series. Nims said the goal is to make targeted adjustments for FY27 to eliminate the structural shortfall rather than impose blunt percentage cuts this year. "We're confident we can address the $1.5 million in excess departmental amounts without impacting services," he told the committee.

Ending: Nims asked the committee to treat the time ahead as an opportunity to prioritize and asked members to flag specific line items for further review; the committee deferred approval of prior-year minutes for later consideration to allow members time to review circulation copies.