41A District Court Financial Analysis Shelby Charter Township Board of Trustees Presentation March 5, 2013

Summary of District Court Finances Using cash-based reporting, the Court appears to be providing revenue to the General Fund Expenditures include wages, benefits, operating costs – Current year retiree healthcare benefit costs are included – About an equal amount is set aside each year to partially fund future costs of current employees – Rent & administrative charges NOT included

On a cash basis, Court has netted over $1.4M over the past seven years.

True Cost of District Court Court expenditures are under-reported $393,000 per year should be set aside to fund retiree healthcare benefit – Shelby currently sets aside about $110,000 per year When considering the true cost of the Court, Shelby has subsidized operations by about $670,000 over the past seven years

The true cost of court operations requires a General Fund subsidy. Over past 7 years, subsidy amounts to over $670,000.

Revenues Received if Court Located Elsewhere Over past 7 years, Shelby would have received $200,000 - $300,000 per year from the Court, if the Township were not hosting the Court Total payments would have amounted to over $1.7M True cost of Court over same period results in $670,000 LOSS to the Township Cash basis of Court finances over 7 years: $1.4M net revenues (with substantial unfunded liability on the balance sheet)

If Shelby did not have responsibility for Court operations, it would have realized $1.78M in cumulative revenues from the Court to the General Fund, over the past 7 years.

When viewed on an annual basis, Court revenues to Shelby would be most stable if Twp was not host

Conclusions District Court operating costs have not been fully accounted for – Significant accrued liability should be included in operating costs – When factored into the budget, Shelby’s General Fund is effectively subsidizing the Court Shelby’s revenues from the Court are more stable if the Township is not hosting the Court If Court leaves Shelby, Township will be required to pay for a portion of current employee benefits after retirement for many years – Shelby Court revenues expected to exceed OPEB costs – Liability would be capped and diminish over time