photo by: Sylas May/Journal-World Illustration

As banks, investors and others prepared to come together last week to purchase nearly $55 million in bonds from Douglas County — essentially lending the county government money — they likely did a little reading on the county’s finances.

The credit rating agency Moody’s had put out a credit report on Douglas County government in advance of the bond sale, which will partially fund the construction of an expansion of the Judicial and Law Enforcement Center.

The report — which the Journal-World examined — contained a statistic critical to bond buyers or to anyone else who lends money. Douglas County has a lot of money in reserve to pay off its debt, even if matters don’t go as planned.

How much money? The statistics show that Douglas County’s reserve funds are nearly $70 million larger than the median for a similar-sized county or city with the same high-quality credit score as Douglas County’s.

That’s the type of thing a bond buyer certainly isn’t going to complain about.

Some Douglas County residents, though, will.

“I’m not opposed to being conservative in the budget process,” Brent Boeve, a Douglas County resident, a retired financial professional with a major oil company, and a frequent critic of Douglas County’s finances, told the Journal-World. “But when you are consistently doing tax increases, this is beyond just being conservative.”

The numbers

The Moody’s credit report includes a section of “key indicators” that compared Douglas County’s finances to the median average of local governments across the country. However, the report didn’t compare Douglas County to all local governments. Rather, it compared Douglas County to other local governments that have the same high-quality credit rating — Aa, the second highest offered by Moody’s — that Douglas County received.

Here’s a look at some key numbers from the Moody’s report:

• Douglas County government finished 2023 with $131.9 million in reserve funds, technically called a “fund balance.” Its total revenue for 2023 was $136.6 million. That means for every dollar that Douglas County received in 2023, the county had an additional 96 cents sitting in various funds, waiting to be used for a later day. Moody’s calls that statistic — the 96.6% in the county’s case — the available fund balance ratio.

• Other local governments with Aa ratings from Moody’s had a median average fund balance ratio of 45.7%.

• If Douglas County kept fund balances at a level equal to the median of its peers — i.e. at 45% instead of 96% — it would have had $62.4 million in fund balances in 2023 instead of the $131.9 million amount. That’s a difference of $69.5 million.

The levels of fund balances kept by local governments do have an impact on the credit ratings they receive from Moody’s and other such organizations. Those credit ratings have a direct impact on how much interest a government pays when it issues bonds or borrows money — the better the rating, the lower the interest rate.

However, the recent Moody’s report also listed scenarios that could cause Douglas County’s credit rating to decline. One scenario was if Douglas County’s fund balance levels fell below 50%. That statement indicates the county could reduce its fund balance levels by about $68 million before it would begin to put downward pressure on the county’s credit rating.

Other actions by Moody’s also indicate that it is comfortable providing the high-quality Aa rating to local governments with far fewer reserves than what the county has. Its methodology report says local governments with fund balance levels of 25% to 35% are eligible for the Aa rating.

Closer to home, the City of Lawrence issued bonds roughly one month prior to Douglas County’s bond issuance. Moody’s provided the City of Lawrence with the same Aa rating. The city had fund balance levels of 45.3%, according to a Moody’s credit report prepared for the city.

photo by: Josie Heimsoth/Journal-World

From left to right, Assistant County Administrator Jill Jolicoeur and County Administrator Sarah Plinsky at the County Commission business meeting on Wednesday, May 28, 2025.

Changes coming?

Douglas County Administrator Sarah Plinsky told the Journal-World that there is some key context needed to understand why the county is significantly above the Moody’s median. That context goes back to the Judicial and Law Enforcement Center that the county was selling bonds for in the first place.

The expansion project — which also includes a new public safety building near the Douglas County Jail — has an estimated price tag of a little more than $80 million. The county is taking out debt of about $55 million to help pay for the project. About $25 million will be paid for through cash that the county has accumulated.

In other words, when the project is complete in the next few years, the county expects to have spent down its fund balance amount by $25 million as part of the JLEC project. Plinsky told the Journal-World via email that the county will use “significant cash reserve to support several capital projects without debt financing.”

“The county anticipates those balances will be back in alignment with median communities once these projects are completed in the next few years,” Plinsky said.

Plinsky, in her response, didn’t specify what other projects the county would use fund balance monies to construct. The projects would need to be significant in size in order for the county’s fund balance levels to come into alignment with the Moody’s median. As an example, if the county were to reduce its fund balance levels by $25 million for the JLEC project, that would still leave the county with $44.5 million more than the Moody’s median.

In a follow-up question, the Journal-World asked Plinsky whether she is anticipating the county will spend $40 million to $45 million of fund balances — over and above the amount spent on the JLEC — to construct new capital projects in the next few years.

Plinsky did not provide a response to that question. Plinsky, who only spoke to the Journal-World via email, did note that the county’s current Capital Improvement Plan calls for the county’s Public Works Department to spend $36.7 million on various road and bridge repairs over the next four years.

However, a review of the plan by the Journal-World shows that, as it is currently written, the county doesn’t intend to draw down its fund balances by $36.7 million. The plan anticipates the majority of those projects will be paid for with incoming property tax dollars collected each year through the county’s operating budget.

The CIP, though, does anticipate that $10 million to $15 million in fund balances could be used to pay for those projects. If the county follows through on that fund balance draw-down, it would be a departure from past years. In many years, the county does not undertake as many construction projects as called for in the CIP. In many years the dollar value of the projects falls below the amount of new tax dollars the county is putting into the CIP fund.

From 2014 through 2023, the county put more tax dollars into the CIP than it spent in seven of the 10 years. The last time the county spent down fund balance in the CIP was 2016. As a result, the fund balance in the CIP fund grew from $28.4 million in 2014 to $40 million at the end of 2023.

In her follow-up response to the Journal-World, Plinsky — after having previously said she expected the county’s fund balance to come into alignment with the Moody’s median — said the median was not a statistic the county prioritized.

“The County Commission has not identified that getting to the median is a goal, nor is it referenced in policy,” she said.

It is not clear, however, whether commissioners were aware of the median and where Douglas County’s fund balances stood in comparison to it. In an interview with the Journal-World, Commissioner Gene Dorsey was not aware of the median until the Journal-World presented it to him.

Dorsey — a newly elected commissioner who has asked questions about the county’s fund balance levels and unsuccessfully sought in February for the County Commission to create a subcommittee to more closely study the county’s budgeting process — said he’s not ready to draw conclusions about the county’s higher-than-average fund balances.

“It gives me something new to look into,” he said of the Moody’s median.

photo by: Jeff Burkhead

Gene Dorsey

The tax issue

In her response to the Journal-World, Plinsky also noted something else important — the county is building the JLEC project without raising the county’s tax rates. The $25 million in cash the county is using on the project has helped the county keep annual debt payments low enough that an increase in tax rates isn’t needed.

Plinsky also could have noted that the county’s property tax rates have been falling. In 2020, the county’s property tax rate stood at 46.43 mills. By 2024 it had fallen to 41.298 mills. The decline came after a period of above-average increases. A Journal-World investigation in 2022 found that from 2002 to 2021, Douglas County’s property tax mill levy increased by 70%. The average increase for a Kansas county during that time period was 30% and the average increase for Douglas County’s fellow urban counties in the state was 8%.

But the County Commission has cut the property tax rate each of the last three years. As the Journal-World reported, last year’s tax cut was the largest since 1995.

The rate reductions haven’t brought much solace to Boeve and some of his fellow residents who join him at County Commission meetings to express fiscal concerns. The reason: Rising home values, which contribute a significant amount to what a homeowner owes in taxes.

Despite the falling property tax rates, Boeve contends many residents have still experienced double-digit growth in their tax bills due to the rapid rise in home prices. Some relatively new data lends support to that claim. The Douglas County Appraiser’s Office this spring released the median home value in Douglas County, dating back to 2020.

In 2020, the median home value was $198,700, and the county mill levy of 46.43 mills resulted in a tax bill to fund county government of approximately $1,060. In 2024, the median home value had risen to $294,900, and the county mill levy of 41.298 mills resulted in a county tax bill of approximately $1,400.

Dorsey, the new county commissioner who will be going through his first county budget session this summer, said there are many county residents who are feeling that lower property tax rates haven’t resulted in lower tax bills.

“A lot of people in my district are concerned about the ever-increasing property taxes,” Dorsey said.

Boeve said the fact the county has so much unused cash on hand during a period when property tax bills are increasing is a problem in his mind. But he argues there is a relatively simple solution.

“I would like for them to consider some property tax rebates, but they are not going to like that at all,” Boeve said of county commissioners.

photo by: AdobeStock

Moodys website displayed on a laptop screen, showcasing credit ratings and risk assessment solutions.

Opportunity costs

Shayne Kavanagh is a professional researcher on the topic of fund balances as the senior manager of research for the Government Finance Officers Association. He doesn’t spend a lot of time looking at the Moody’s median. He noted a phrase that’s been used to question averages many times before: “When you are buying a pair of shoes, you don’t measure your neighbor’s feet.”

That doesn’t mean fund balances should be forgotten. Rather, Kavanagh is a proponent of local governments giving serious consideration to the right amount of money to keep in reserve. He said fund balances should be viewed both as a savings account and an insurance policy.

The insurance policy analogy refers to how fund balances can be used when a community suffers a disaster — like a major tornado — or a downturn — like a recession — that puts unexpected pressure on the government’s finances. Cash from the fund balances can help make ends meet.

But just like with a household, a government can have more insurance than it needs or can afford.

“Having the right amount doesn’t mean infinite dollars,” Kavanagh said. “You can over-insure something, absolutely.”

Unlike a household, however, the county isn’t making a monthly insurance payment. Rather, the cost to the county is what economists call an “opportunity cost.”

“Anytime you set money aside, it is not being used for public services and it is being taken out of the private economy,” he said.

That creates questions like whether the county would have been better off starting the JLEC project years ago, when construction costs were lower, than saving for years before starting the project. Or, for those like Boeve, who want to see a tax rebate, the question may be how much growth the Douglas County economy would have seen if local residents would have been able to keep the tens of millions of dollars that are sitting in reserve in county accounts.

Of course, whether the cost of anything is too high is relative. It is not at all clear that a majority of Douglas County residents think the costs of the county keeping large amounts of reserves are exorbitant.

“I think there are some people in the county who are fine with paying higher and higher taxes as long as the programs that are near and dear to their hearts are funded,” Boeve said. “But there are others who are not fine with that.”

Who is in the majority? Boeve doesn’t think it is the group fine with rising taxes, but he can’t say for certain. The most recent county elections in November didn’t send the answer he expected. The issue of rising taxes and growing fund balance have been in the news for the last couple of years, and Boeve and fellow residents have been frequent voices at County Commission meetings.

Yet, the issue didn’t seem to move the needle with voters. Both incumbents up for reelection won their seats.

“With the results of the November election locally, I feel like the Board of Commissioners feel more empowered,” Boeve said. “They retained their seats, and they believe that means the majority of the folks in Douglas County support what they are doing.”

They may not be wrong.

“I don’t know,” Boeve said. “I know everybody who calls or emails or talks to me at meetings is really fed up. I really thought there might be turnover of one or two of those board seats. It just didn’t happen.”