An auditor presented Seward County’s annual financial report to the Seward County Commission and told commissioners the county showed a $6.4 million net decrease in net position on a full-accrual basis for the period under review.

The auditor said the county had a $7.3 million decrease in its general governmental activities, offset by nearly $1 million of positive results in business-type activities, leaving an overall net decrease of about $6.4 million. “I'll just go over the Seward County audit,” the presenter said at the start of the review.

The audit covers two bases of accounting: full-accrual statements, which include long-term items such as fixed assets, accumulated depreciation and debt; and modified cash or budgetary statements used for legal budgeting and fund-level reporting. On the full-accrual statements, the auditor reported an ending net position of just under $19 million; on governmental fund (budgetary) statements the reconciled fund balance was about $11 million after accounting for items such as unfunded pension liabilities and long-term debt.

Why it matters: commissioners were told the county’s trajectory of spending in 2024–25 is “unsustainable” without either higher revenue or reduced spending. The auditor and staff pointed to several drivers, including increased maintenance and administrative charges allocated to the landfill, pension-plan liabilities, and certain transfers to road and bridge funds.

Key details from the audit and budget discussion

- Encumbrance finding: the audit identified a control finding relating to encumbrance records. The auditor explained the county’s accounting system does not maintain continuous encumbrance balances and that staff accumulate outstanding encumbrances at year-end instead of reporting them in real time. The auditor said a purchase-order (PO) system would be required to record encumbrances continuously.

- Pension liabilities: the auditor reviewed the county’s share of pension liabilities reported under the Kansas public-employee plans and presented historical figures showing the county’s proportionate share rose from about $7.7 million in 2015 to about $13.3 million in 2024 (reported in the audit’s schedules). The auditor said the plan’s funded ratio stood at about 72.8% in 2024 and noted contribution rates have increased over time.

- Reserves and budget items: the 2026 budget includes a $350,000 reserve for claims and a separate line for protested taxes; the budget also included a $1 million set-aside and an additional planned $1.5 million carryover, creating a $2.5 million available amount in the cash carryover if not spent. Staff cautioned the money is available only if revenues are collected as budgeted.

- General-fund trend and transfers: the audit showed the general fund began 2024 with about $7.7 million and ended with roughly $5.2 million. Budget estimates for 2025 showed a projected decline from roughly $5.1 million to about $2.4 million, assuming a $1 million settlement. The auditor noted transfers to road and bridge and machinery funds increased spending pressure.

- Legal and procedural context: the presenter explained both GAAP-based (full-accrual) statements and statutory/budgetary (modified cash) statements are required; the statutory basis is a simpler reporting method allowed under Kansas law and referenced in the audit notes.

Discussion and follow-up

County staff and elected officials asked clarifying questions about specific line items, how pension assumptions are developed and reported, and the county’s ability to meet certain external reporting requirements. County staff said administration had an exit conference with the auditor and that administration will address the encumbrance procedure. Commissioners were also told the county’s attorney will provide updates on outstanding litigation and any settlement timelines that could affect the budget.

The audit packet provided to commissioners includes the basic financial statements (statements 1–9), notes, pension schedules, and fund-level budgetary comparisons. The packet also references the hospital as a discretely presented component unit whose debt arrangements affect county exposure.

Ending

Commissioners were urged to consider either revenue increases or expense reductions to stabilize reserves. Staff said they will supply further documentation, and the county attorney will provide legal updates on outstanding settlements and appeals that could change budget liabilities.