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COUNTY ADMINISTRATION / TREASURER / TAX COLLECTOR - Chief Administrator Gabriel Hydrick / Tax Collector Parker Hunt
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Requested Action(s)
recommendation
a) INFORMATIONAL PRESENTATION - Informational presentation for the Board on background and issuance of TRANS
b) RESOLUTION - Request adoption of a resolution authorizing the Board of Supervisors to issue a Tehama County 2025-26 Tax and Revenue Anticipation Note (TRAN) and approving the sale of such note to the Tehama County Treasury Investment Pool and approving certain related matters therewith, not exceeding $25,000,000 with a mature date no later than 6/30/2026
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Financial Impact:
The general fund will remain unaffected by the Tax and Revenue Anticipation Note (TRAN). Departments utilizing the TRAN will be responsible for the interest on the borrowed amount, calculated using the One-Year Treasury Rate, adjusted quarterly.
Background Information:
A Tax and Revenue Anticipation Note (TRAN) is a short-term external borrowing tool that counties can use to manage cash flow fluctuations, particularly when there's a delay between expenditures and the receipt of anticipated revenues, such as state reimbursements. Tehama County has experienced significant negative cash balance issues, leading to the adoption of a TRAN resolution for the first time last year to mitigate these problems. The issues began in fiscal year 2004-2005 with the consolidation of the Skilled Nursing Facility into the Health Services budget, resulting in an ongoing negative cash balance. For seven years, the General Fund covered negative interest on behalf of the Health Services Agency, totaling over $554,084. More recently, COVID-19 and staffing challenges have exacerbated these issues by hindering the County's ability to submit timely reimbursement claims. The County's position is largely due to the state's practice of delaying reimbursements and reducing advanced funding for county programs. Historically, Health Services Agency claims were closed and reimbursed within five years. However, the current practice allows the state up to five years just to review claims, potentially extending the reimbursement period to a decade. Other departments, such as the Department of Social Services (DSS) and Public Works, have also faced negative cash balance challenges. DSS issues became more recent following the 2011 realignment, which requires additional steps to recognize revenues. Public Works faces challenges due to the size and cost of projects, including emergency projects requiring immediate attention, and the lengthy reimbursement timeframes, which can range from one to several months. To address these ongoing issues, Tehama County and the Treasurer's office have agreed to utilize a TRAN. The county is also working on establishing policies and procedures for cash balance and backend borrowing, updating current debt policies, and implementing an ongoing review process to ensure new procedures are followed. Departments utilizing the TRAN or a revolving credit facility will use Form A-135 to identify funding sources for grants and projects. The county is also advocating for the state to ensure timely reimbursements to counties. Given these persistent challenges and the initial adoption last year, the County is now requesting permission to renew the TRAN for Fiscal Year 2025-2026.