Smith Brooks of Kenneth Cobb Company, P.C., presented the audit to the Dillon City Council at a recent meeting.
Brooks said the city received an unqualified opinion once again, which is the best opinion that one can receive.
FINANCIAL
HIGHLIGHTS
Some of the financial highlights included:
-The assets and deferred outflows of resources of the city exceeded its liabilities and deferred inflows of resources at fiscal year ending June 30, 2016 by $29.9 million (net position). Of this amount, $2.4 was restricted and the city’s unrestricted net position (the amount that may be used to meet the city’s ongoing obligations to citizens and creditors) was $2.0 million deficit for governmental activities and $.6 million excess for business-type activities. The remaining $28.9 million of net position is for the city’s investment in capital assets.
-The city’s total net position decreased by $233,467.
-As of the close of the current fiscal year, the city’s governmental funds reported combined ending fund balances of $4.0 million, an increase of $99,500 (this amount includes $10,189 prior period adjustment) in comparison with the prior year. Approximately 68 percent of this total or $2.7 million is unassigned fund balance.
-The city’s total capital assets decreased by approximately $584,000 during the current fiscal year due to capital asset additions of approximately $1,069,000, offset by depreciation expense of approximately $1,576,000 and the sale of land $67,000.
-The city’s total bonded debt decreased by $826,194 during the current fiscal year.
Net Position
Net position may serve over time as a useful indicator of a government’s financial position. The city’s combined net position totaled $29.9 million at the close of the most recent fiscal year.
The largest portion of the city’s net position $28.9 million reflects its investment in fixed assets such as land, buildings, equipment, and infrastructure (roads, bridges, and other immovable assets); less any related debt used to acquire those assets that is still outstanding. The city uses these fixed assets to provide services to citizens; consequentially, these assets are not available for future spending. Although the city’s investment in its fixed assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the fixed assets themselves cannot be used to liquidate these liabilities.
A portion of the city’s net position (8 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position may be used to meet the city’s ongoing obligations to citizens and creditors. Internally imposed designations of resources are not presented as restricted net position.
At the end of the current fiscal year, the city is able to report positive balances in total net position for the government as a whole, as well as for its separate governmental and business-type activities.
Changes in Net Position
The city’s net position decreased by $233,467. Approximately 17 percent of the city’s total revenue came from property taxes, while 10 percent resulted from grants and contributions (including state and federal aid). Charges for various goods and services provided 65 percent of the total revenues. The city’s expenses cover a range of services. The largest expenses were for public safety and water and sewer.
Governmental Activities
Total revenues decreased $180,000 compared to the prior year. This was caused by a decrease in franchise fees, police fines, and drug fund collections. Total expenses increased $39,000 compared to the prior year. This increase occurred mostly in the general government and parks and recreation departments. The city showed a decrease in net position of approximately $63,000.
Business-type Activities
Total revenues decreased $57,000 compared to the prior year. Total expenses decreased $213,000. This decrease occurred mostly in the wastewater treatment department. The city had a decrease in net position of approximately $170,000.
FINANCIAL ANALYSIS OF THE CITY’S
INDIVIDUAL FUNDS
The city uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds
The focus of the city’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the city’s financing requirements. In particular, an unassigned fun balance may serve as a useful measure of government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the city’s governmental funds reported total fund balances of $4.0 million. As a measure of liquidity, it may be useful to compare unreserved fund balance to total fund expenditures. An unassigned fund balance of $2.7 million represents 42 percent of total governmental fund expenditures. The fund balance of the city’s general fund increased by approximately $3,000 during the current fiscal year.
Proprietary Funds
The city’s proprietary funds provide the same type of information found in the government wide financial statements, but in more detail.
GENERAL FUND
BUDGETARY
HIGHLIGHTS
The original approved budget was not amended for the fiscal year ended June 30, 2016.
The city’s actual results for the General Fund were different than budgeted amounts due to the following:
-Actual revenues of approximately $5,432,000 exceeded budget by %51,000. All revenue line items were over budget except for police fines, and interest.
-Actual expenditures of approximately $5,603,000 exceeded budget by $90,000. The following departments were each over budget by more than $10,000: council, recreation programs, wellness center, and beautification.
FIXED ASSET AND DEBT ADMINISTRATION
Fixed Assets
The city’s investment in fixed assets for its governmental and business-type activities as of June 30, 2016, amounts to $61.0 million, less accumulated depreciation of $30.2 million, leaving a net book value of $30.8 million. This investment in fixed assets includes land, buildings, improvements, equipment, and infrastructure. Infrastructure assets are items that are normally immovable and of value only to the city, such as roads, bridges, drainage systems, and similar items.
The decrease in the city’s investment in fixed assets for the currents fiscal year was 1.6 percent in term s of net book values. Actual expenditures to purchase or construct capital asset was $1.1 million for the year. The decrease in the city’s fixed assets was caused by depreciation expense netted with the following assets that were added to the depreciation schedule: code enforcement – 1 vehicle, computer, and software; fire – 10 air packs; street – zero turn mower; parks and recreation – zero turn mower; police department – 2 vehicles and various equipment received through the Federal 1033 Program; golf course – irrigation pump; water and sewer – computer server, 2 golf carts, and many improvements to water, sewer and wastewater treatment plant system.
Debt Activity
The City of Dillon’s total debt decrease by $826,000 during the current year.
NEXT YEAR’S
BUDGET RATES
The city has approved a balanced budget for the fiscal year ended June 30, 2017. The following are some of the factors in preparing this budget:
-The city increased its sanitation rates to help with the increases from capital purchases and employee salary increases.
-The city’s water and sewer rates were increased to help with the increases from repairs to the wastewater facilities and employee salary increases.
-The city’s 2% hospitality tax funds will be used as needed to help operate the golf course. Council approved for management to transfer up to $15,000 per month of 2% hospitality tax funds without getting additional approval from council. Dillon County has continued to give the city $50,000 per year to help operate the golf course.
-The South Carolina Retirement System employer rates have continued to increase.
Further notes can be found in the complete audit report. To see a copy of the complete audit of for more information, contact the City of Dillon.
(Note: The financial highlights and discussion are taken directly from “Management’s Discussion and Analysis” in the City of Dillon audit report.)
