Secretary-Treasurer Financial Report January 2023
Greetings and Happy New Year Leech Lake Band Members! It is my honor and privilege to present the Secretary/Treasurer report to the people for January 2023, including a financial report for the first quarter of Fiscal Year 2023, which ran from July 1, 2022 to September 30, 2022.
Government FY 23 Quarter 1 Report
For the period ending September 30, 2022, the total revenue for the General Fund was $7,884,490, reflecting an increase of $2,316,677 over the same period last year, for a year over year increase of 41.6%. The substantial increase in General Fund dollars for this reporting period is due to tax agreement dollars from the State of Minnesota from last year coming into the Band during this quarter. Total General Fund expenditures for the period ending September 30, 2022 were $6,996,037, reflecting a $1,850,338 increase over the same period last year, for a year over year increase in General Fund expenditures of 36%. A large portion of this increase from last year is due to last year’s temporary transfer of Tribal Police Department salaries from the General Fund to CARES Act funds. These salaries were transferred back to the General Fund after the CARES Act funds were expended by December 31, 2021.
For the period ending September 30, 2022, the total revenue for the Special Revenue Fund was $24,985,744, reflecting an increase of $1,003,558 over the same period last year, for a year over year increase of 4.2%. Total Special Revenue Fund expenditures through September 30, 2022 were $27,043,727, reflecting an increase of $472,323 over the same period last year, for a year over year increase in Special Revenue expenditures of 1.9%. While Special Revenue spending has increased minimally, there has been a greater increase in revenue than spending. This is a pattern we need to continue to see in our Special Revenue Fund as we continue to work on systemic issues around our third party billing collections and grant management. This is especially important as we continue to see expenditures in excess of revenue for the reporting period.
For the period ending September 30, 2022, the total revenue for the Indirect Cost Pool was $2,938,510, reflecting an increase of $694,001, for a year over year increase of 30.9% for the same period last year. Total Indirect Cost Pool expenditures through September 30, 2022 were $3,595,861, reflecting an increase of $67,553 over the same period last year, for a year over year increase of 1.9%. Importantly, our Indirect Cost Pool is funded by our Indirect Cost Rate we negotiate with the federal government. Due to being so far behind in our audits earlier this year, we were not allowed to negotiate this rate. However, since we did complete the FY 2020 audit in September 2022, we have begun the process to negotiate our Indirect Cost Rate for the current fiscal year and will have the rate finalized soon.
Gaming FY 23 Quarter 1 Report
On our enterprise side, for the first quarter of FY 23, Total Casino, Small Business and Gaming Administration revenue increased by 3.76% over the same period last year. The Total Cost of Goods increased by 59.2% over the same period last year. Total Payroll Expense for the period ending September 30, 2022 increased by 19.53% over the same period last year. Total Operating Expenses for the period ending September 30, 2022 increased by 10.88% over the same period last year. The total Net Profit from Casino, Small Business and Gaming Administration for the period ending September 30, 2022 decreased by 39.79% over the same period last year. These numbers reflect that the slight increase in revenue for this quarter was not enough to overcome the drastic increase in the cost of goods or in payroll. The cost of goods increase is indicative of national inflation and global supply chain issues. The increase in payroll reflects more people returning to work. We continue to monitor both of these areas to ensure the long term stability and profitability of our enterprises going forward. Importantly, our enterprises over all continue to be profitable, just not at the same level as last year for the same period.
FY 23 Budget Approval Status
I am disappointed to announce that we have not yet completed our FY 23 budget, despite now being half way through the fiscal year. In October, I reported that our new goal was to complete the budget well before the end of calendar year 2022. While substantial progress was made on that goal, including initial RBC approval of the budget and the completion of community meetings in District II, District III and the urban areas of Duluth and Minneapolis, we were not able to complete the District I meeting before December 31, 2022. It was scheduled to take place, but a power outage prevented the meeting from happening. As a result, the RBC approved a third temporary spending resolution authorizing government funding through January 31, 2023. A District I community budget meeting took place on January 5, 2023. The Budget Team also met on January 9, 2023 to review the public input and comment on the budget and spending priorities. The final step now is RBC approval and adoption, which as of this writing is scheduled to take place on January 24, 2023.
I once again apologize to the people of Leech Lake for not getting this budget completed and adopted in a timelier manner. However, due to the hard work of the Budget Team and our Administrative staff over the last few months, many systemic and long-term issues in our budget have been addressed and we should be able to have more timely approval and adoption of our budgets going forward.
External Audit Status Update
Another on-going issue to report on relates to our external audits. In October, I reported that we had just finalized our FY 2020 audit on September 30, 2022, almost two years late. Since that time, the RBC has replaced our external auditors on the government side and we are in the final stages of approving a letter of engagement with our new external auditors. Our conversations with these auditors to date have gone very well and we are hopeful that we will be caught up on our FY 21 and FY 22 audits by this summer.
NTIA – Broadband Grant
In December, the LLBO was awarded a grant from the National Telecommunication and Information Administration (NTIA) of over $18 million to expand our broadband capacity and access within the boundaries of the Reservation. At this point, the plan calls for laying fiber optic cable to each of our community centers and then installing towers at those centers to emit broadband signals. The goal is to provide high quality broadband service to all homes within the Reservation.
On December 27, 2022, the RBC authorized the creation of a taskforce to work toward the development of a Leech Lake Tribal Broadband Office that will oversee this project and ensure implementation to reach all community centers within the Reservation in the coming years, with the ultimate goal of providing high speed and wireless access to all homes throughout the Reservation.
Other Governmental Matters
There are a number of other areas the RBC continues to work on, including addressing the issues around our third party billing and capturing as much revenue as possible. The taskforce working on this project is moving forward and will be presenting more information to the RBC in the coming weeks about how to continue to monitor our programs for sustainability. This project directly impacts our Special Revenue Fund and will help ensure the stability and sustainability of our programs and services.
We are also lobbying in St. Paul and Washington, D.C. for our various state and federal priorities, including sports wagering and e-pull tab reform, tax agreement changes, and completing the land transfer authorized by the Leech Lake Reservation Restoration Act.
There is a lot happening for Leech Lake Band members and we are working hard to bring you the information and services you need. As always, if you have any questions or concerns, please contact my office at any time.
Leonard “Lenny” Fineday