The South Carolina Treasurer’s Office is withholding about $10.5 million from Orangeburg County due to the county not meeting the state’s Jan. 1 legal deadline to report financial statements.

As of June 25, the office was withholding $10,495,442.55 from the county because it failed to meet the Jan. 1, 2024, deadline to submit its 2023 audit ending the fiscal year of June 30, 2023.

According to the state treasurer’s office, Orangeburg County is the only county in the state to have a delinquent outstanding audit for 2023.

The money is being withheld from the county and will not be released until the office receives the county’s 2023 fiscal year audited financial statements, according to department officials. 

Orangeburg County Administrator Harold Young said the audit is being finalized and should be ready by late June or early July.

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South Carolina state law mandates counties perform annual audits and that the state treasurer’s is required to withhold certain funding if counties do not submit their completed audit by the Jan. 1 deadline of the year following the ending of the fiscal year’s audit.

State officials say reporting on time helps county councils set their budgets and keeps government operations transparent to the public. Without the state’s deadline, there might be no accountability.

While the state is withholding funds for the late 2023 fiscal year audit, it did release $22,466,118.65 due the county from its delinquent FY22 audit.

The county submitted its 2022 fiscal year audit to the state earlier this year. The deadline to submit the 2022 audit was Jan. 1, 2023.

“Fiscal 2022 was very challenging for us in a number of ways,” Orangeburg County Controller Gary Cooke said during a council retreat held earlier this year. “We had some delays early in the process that put us into a position. By the time we were ready for them (Mauldin and Jenkins), they were already involved in the fiscal 2023 audit.”

“They had to finish everthing with their fiscal 2023 clients,” Cooke said. “That pushed us into kind of a December starting period. They worked very hard in December and January and to get everything wrapped up so that we were able to get this issue this past Friday (Feb. 22).”

It was the first year the county has used Mauldin and Jenkins as its auditing firm.

“With the first year under their belt, we feel sure they will be more efficient,” Cooke said. “We are working diligently to get everything ready for them right away.”

“We are busting our behinds to move this forward,” Cooke said.

Young said the county has hired another certified public accountant to help move the process along.

He said the county has also upgraded its financial staff.

“That will be a key piece that will help us get that back on track,” Young said.

The county plans to begin the 2024 audit in late August and early September with the intention of having the audit to auditors by the state deadline.

It was not the first time the state has withheld funds from the county.

The state withheld about $17 million from the county for being late with its 2021 fiscal year audit.

At that time, the county blamed the coronavirus for impacting staffing as well as the changeover to a new computer system.

Clean 2022 audit

While the county has struggled to meet the state’s audit-submission deadline, the 2022 audit itself received a clean or unmodified opinion.

“That is the best opinion they can give,” Cooke said.

According to the audit, the county’s general fund balance ending June 30, 2022, was $7,442,443 in the black.

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Young noted the fund balance when he became administrator in 2012 was about $700,000.

“It is not where we need to be, but it is better than we had,” Young said.

According to the audit, the county’s general fund revenues ending in June 2022 were $46,184,008 and expenditures were $46,097,640.

The yearend profit was $86,448 in the general fund.

Cooke noted the county had about $4.3 million transferred out of its general fund to cover operations in the county’s detention center.

Cooke said the general fund was negatively impacted by the fact that the county did not receive revenues in a timely fashion to show up on the 2022 audit.

For example, the county received about $4.7 million in grants and fees that were not calculated in revenues for the 2022 fiscal year.

“That impacted our bottom line,” Cooke said.

As a result, the county saw a yearend general fund balance balance of $7,442,443 compared to a beginning year balance on July 1, 2021, of $9,214,784.

The decrease in the general fund balance ending June 30, 2022, was $1,772,341.

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“This decrease you see here temporary because the grant money did not come in time for us to recognize it,” Cooke said. “If we had gotten the grant money in time, we would have gotten a small increase in the fund balance rather than this $1.7 million decrease. It is a timing issue.”

The total governmental fund balance (which includes the general fund, capital project sales tax, special education, roads and bridges, American Rescue Act funds, detention center and non-major governmental funds) ending June 30 was $81,021,448, compared to the fund at the beginning of the year of $83,348,798.

Cooke noted the county has three enterprise funds that include broadband, sewer and water.

“The three of those are operated primarily off of the charges they generate from the use of their services,” Cooke said, noting the funds are primarily related to economic development. “We spend the money to enhance those services.”

He said the county’s capital assets in broadband were $15.3 million; sewer about $23 million; and water $4.3 million, with a $46.3 million total.

County Council Vice Chairman Johnny Ravenell asked Cooke what council needs to keep an eye on going forward.

Cooke said council’s primary focus should be on the general fund and responding to changes in revenues and expenditures and inflation impacts.

“We have a finite number of resources and we have to spend wisely to make sure that we don’t exceed what we have available to spend,” Cooke said.

He also noted that the county should keep an eye on funds that consistently are running deficits.

These include the county’s roads and bridges fund (which saw a $4.2 million deficit in 2022); the special education fund (deficit of $3.9 million); water utility fund (deficit of $3.4 million); solid waste fund ($2.8 million) to name a few.

“Keep these funds at the forefront of your thought processes,” Cooke said.

The county has over the past two years focused on developing plans to address these deficits by looking at rate schedules, new allocations of fee-in-lieu of taxes to water and sewer utility, and increasing road and bridges fees.

Contact the writer: gzaleski@timesanddemocrat.com or 803-533-5551. Check out Zaleski on Twitter at @ZaleskiTD.

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