BEMIDJI -- Nearly a year and a half after approaching what some officials called a 'fiscal cliff,' Beltrami County's financial state is now holding steady.
"We've reached stability now," County Administrator Kay Mack said. "We're at a point where we're no longer dipping into the (general) fund balance. That's a huge game changer for us. We're not back to fiscal health, but we're also not talking about a fiscal cliff anymore."
The fiscal cliff phrase began circulating in August 2018, based on the growing costs of the Health and Human Services Department's foster care operations. Rapid increases in the number of foster care cases were creating higher costs for the department, causing the county to cover the amounts with its general fund.
In 2017, for example, the total expense for out-of-home foster care placements was $11.9 million. The county had dedicated $4.1 million in the tax levy for foster care costs, while federal and state resources came to $4.75 million. The remaining $3.025 million, though,was covered by the county's reserves.
In December 2012, the county's available reserves were at $35 million, where as they had gone down to $22.5 million in August 2018. The trend aligned with the growing number of foster care cases, with 471 children in placement in 2008 and 1,284 in 2017.
In spring of this year, the County Board of Commissioners were given a presentation with a model showing the general fund balance heading to negative in either 2022 or 2023 if increases in foster care continued. Fortunately, though, the county received some good news over the summer.
An important piece in improving the fiscal situation was the state Legislature taking action on what's called the Red Lake Nation Initiative. The initiative is a plan to take Beltrami County out of the foster care operations for Red Lake.
Currently, the Red Lake Nation is legally responsible for handling out-of-home placement work, while Beltrami County is financially responsible for the reimbursements. However, the initiative, authorized to start in 2021 by the Legislature, will allow Red Lake to work directly with the state and federal governments on foster care finances.
Red Lake will be the third area reservation to have such an initiative, with the Leech Lake Band of Ojibwe and White Earth Nation having implemented their own versions in previous years.
Along with authorizing the initiative, the legislators also provided $3 million in financial relief for the county to be used in 2019 and 2020.
Also this summer, department staff noted that the number of children in out-of-home placement for 2018 was 1,158, down from 1,262 in 2017 and 1,172 in 2016. It marked the first decrease since 2012 and the lowest count since 2015.
With positive signs in 2019, Mack said the future will be about building the county's financial status back up.
"We are going to have to be very intentional about rebuilding the fund balance," Mack said. "We have to figure out how to get healthy."