Audit gives city clean bill of financial health
Published 10:50 am Thursday, June 9, 2016
The city of Austin received a clean bill of health in its 2015 audit.
Kim Hillberg, of CliftonLarsonAllen LLP issued a positive report on the city’s financial standing during an Austin City Council work session Monday.
“It’s very consistent with what we had in the past and to come in year after year and say that, I think it just speaks very highly … to the finance department,” Hillberg said. “Not only the work they do getting ready for the audit, but also the work they do year-round for the process as well.”
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Hillberg said financial statements were fairly presented in accordance with generally accepted accounting principles and there were no control deficiencies in the internal control structure.
Director of Administrative Services Tom Dankert said the general fund came in close to the budget. On the revenue side, the city took in 101 percent of the budget and spent 92 percent of the approved final budget on expenditures. Some large expenditures were not spent in 2015 and were carried over into 2016 as a budget amendment using fund balance.
The unassigned fund balance ended at 54 percent of expenditures in the general fund, which increased from the previous year, Dankert said. That percentage is slightly above the internal policy/state recommended guidelines as a percentage of expenditures.
“We kind of recommend right around 50 percent to cash flow for that half year before you get the first LGA [local government aid] payment in property tax settlement,” Hillberg said. “There’s going to be times when you’re above and below, but right around 50 is what we tend to look at.”
The general fund revenues totaled $13.5 million and the city’s LGA in 2015 totaled $7.96 million, she said.
“That’s a good chunk of that revenue in that general fund,” Hillberg said. “We always just like to highlight that because … a change in the funding could have some serious impacts.”
Dankert said staff will return to council in 2016 to transfer some of that fund balance excess to cover losses in the risk management fund, mostly for health insurance and part of a project to remodel Austin City Hall.
Hillberg said the city spent about $900,000 in federal financial assistance and that audit was also clean, as was the report for legal compliance findings for the Minnesota statutes.
Auditors also looked at fund balances and found no deficits there. The total fund balance within the general fund itself closed out the year at $7.76 million, which is up by $713,000 from the previous year, Hillberg said.
“We measure total fund balance by annual expenditures, kind of as a gauge of financial health for that general fund,” Hillberg said.
Main expenditure categories in the general fund include general government, public safety, streets and highways and culture and recreation, she added.
She talked to council about the state benefit pension plan the city currently has in place.
“All across the country [these] are underfunded,” Hillberg said. “Each participating employer gets to record their proportionate piece of the unfunded liability.”
Hillberg said 2015 was the first year the city “shared in the pain” and the girth for the general employee’s portion of the plan is $4.5 million and $3.6 million for the police and fire piece.
“It’s entity wide financial statements, it’s not like you have long term debt payments,” Hillberg said. “It’s more or less spreading out that unfunded liability, that [in] theory, will be paid off over a number of years through future employer and employee contributions and investment earnings.”
Mayor Tom Stiehm asked if the council had to raise that contribution of the city and the employees.
Dankert said it’s basically a transaction and the city is mandated to follow the rates set in Minnesota through the legislative process.
“So every state has pretty much adopted the standard that says, ‘Whatever portion you owe that, in theory, you need to start recording so we can see overall how your state is doing, how you’re doing’ … We will never pay that until the state of Minnesota changes your contribution rates,” Dankert said.
Hillberg agreed and said it was the state’s goal to have a 100 percent funded plan at some point in time.