The Dillon City Council recently received their audit report for the fiscal year ending June 30, 2016.
Here is a summary from the report:
City of Dillon, South Carolina
Management’s Discussion and Analysis
Management of the City of Dillon provides this Management’s Discussion and Analysis for readers of the City’s financial statements. This narrative overview and analysis of the financial activities of the City of Dillon is for the fiscal year ended June 30, 2017. We encourage readers to consider this information in conjunction with the additional information that is furnished with the City’s financial statements (which can be seen at the City Of Dillon administrative office).
Financial Highlights
• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at fiscal year ending June 30, 2017 by $30.5 million (net position). Of this amount, $2.6 million 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 a $2.4 million deficit for governmental activities and $11,480 excess for business-type activities. The remaining $30.2 million of net position is for the City’s net investment in capital assets.
• The City’s total net position increased by $560,214.
• As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $3.8 million, a decrease of $121,844 in comparison with the prior year. Approximately 66 percent of this total or $2.5 million is unassigned fund balance.
• The City’s total capital assets increased by approximately $1.5 million during the current fiscal year due to capital asset additions of approximately $3.2 million offset by depreciation expense of approximately $1.6 million and the net book value of assets disposed of $29,765.
• The City’s total bonded debt increased by $144,897 during the current fiscal year.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to City of Dillon’s basic financial statements. The basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains additional required supplementary information (budgetary schedules) and other supplementary information (combining and individual fund financial statements) in addition to the basic financial statements themselves. These components are described below.
Government-Wide Financial Statements
The government-wide financial statements provide a broad view of the City’s operations in a manner similar to a private-sector business.
The statement of net position presents all of the government’s assets and liabilities, with differences between the two reported as “net position”. Over time, increases or decreases in the City’s net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will not result in cash flows until future fiscal periods (such as uncollected taxes and earned but unused vacation leave). This statement also presents a comparison between direct expenses and program revenues for each function of the City.
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, sanitation, and parks and recreation. The business-type activities of the City include water and sewer operations.
The government-wide financial statements can be found immediately following this discussion and analysis.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statement. However, unlike the government-wide financial statements, the governmental fund financial statements focus on the near-term inflows and outflows of spendable resources. They also focus on the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the government’s near-term financing requirements.
Because the focus of governmental funds is more narrow than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and the governmental activities. These reconciliations are presented on the pages immediately following each governmental fund financial statement.
The City has one major governmental fund for presentation purposes: the general fund. The City’s other nonmajor governmental fund details are shown in the supplemental section of the financial statements.
The City adopts an annual appropriated budget for its general fund and special revenue funds. Budgetary comparison statements have been provided herin to demonstrate compliance with those budgets.
The basic governmental funds financial statements can be found immediately following the government-wide statements.
Proprietary Funds
Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer operations.
The basic proprietary fund financial statements can be found immediately following the governmental fund financial statements.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and the fund financial statements. The notes to the financial statements can be found immediately following the proprietary fund financial statements.
Required Supplementary Information
The basic financial statements are followed by a section of required supplementary information which includes a budgetary comparison schedule for the General Fund and a schedule of the City’s proportionate share of the net pension liability as well as a schedule of the City’s pension contributions.
Other Supplementary Information
Combining and Individual Fund Financial Statement and Schedules
The combining and individual fund financial statements are presented following the required supplementary information.
Government-Wide Financial Analysis
Net Position
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. The City’s combined net position totaled $30.5 million at the close of the most recent fiscal year.
The largest portion of the City’s net position $30.2 million reflects its investment in fixed assets such as land, buildings, equipment, and infrastructure (road, 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 the 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’s 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 increased by $560,214. Approximately 15 percent of the City’s total revenue came from property taxes, while 16 percent resulted from grants and contributions (including state and federal aid). Charges for various goods and services provided 59 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 increased $450,000 compared to the prior year. This was caused by insurance proceeds, FEMA grants, and gains on assets sold/disposed, mostly related to Hurricane Matthew. Total expenses increased $249,000 compared to the prior year. This increase occurred throughout most departments within the City. The City showed an increase in net position of approximately $138,000.
Business-type Activities
Total revenues increased $840,000 compared to the prior year. This increase was caused by capital grants received for various water & sewer projects. Total expenses increased $249,000. This decrease occurred mostly in the wastewater treatment department. The City had an increase in net position of approximately $422,000.
Financial Analysis of the City’s Individual Funds
As noted earlier, 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 neat-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, an unassigned fund balance may serve as a useful measure of a 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 $3.8 million. As a measure of liquidity, it may be useful to compare unreserved fund balance to total fund expenditures. An unassigned fund balance of $2.5 million represents 35 percent of total governmental fund expenditures.
The fund balance of the City’s general decreased by approximately $122,000 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. See comments above in the business-type activities section.
General Fund Budgetary Highlights
The original approved budget was not amended for the fiscal year ended June 30, 2017.
The City’s actual results for the General Fund were different that budgeted amounts due to the following:
• Actual revenues of approximately $5,703,000 exceeded budget by $301,000. All revenue line items were over budget except for charges for service, police fines, wellness center, and interest.
• Actual expenditures of approximately $6,144,000 exceeded budget by $277,000. The following departments were each over budget by more than $10,000: council, street, refuse collection, sanitation, wellness center, and capital outlay.
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, 2017, amounts to 464.0 million, less accumulated depreciation of $31.7 million, leaving a net book value of $32.3 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 increase in the City’s investment in fixed assets for the current fiscal year was 4.9 percent in terms of net book values. Actual expenditures to purchase or construct capital assets were $3.2 million for the year. The City’s total depreciation schedule: a code enforecement-1 vehicle,; fire- 10 air packs; street- 1 tractor; refuse- knuckleboom loader; garbage – 1 garbage truck; recreation – rehab concession stand, sidewalk, and baseball scoreboard; wellness center- weights and equipment; police – 6 vehicles and camera system for offices; water and sewer- many improvements to the water, sewer and wastewater treatment plant systems.
Additional information on the City’s capital assets can be found in note 2C of the notes to the financial statements of this report.
Next Year’s Budget and Rates
The City has approved a balanced budget for the fiscal year ended June 30, 2018. the following are some of the factors considered in preparing this budget:
• Increased sanitation rates.
• Increased water & sewer rates due to rate study.
• Council approved to continue to use 2% Hospitality tax funds to help operate the Golf Course and Dillon County is continuing to give $50,000 per year to help operate the Golf Course.
Request for Information
This financial report is designed to provide a general overview of City of Dillon’s finances for all of City of Dillon’s citizens, taxpayers, customers and investors and creditors. This financial report seeks to demonstrate the City’s accountability for the money it receives. Questions concerning any of the information provided in this report or request for additional information should be addressed to: City of Dillon, P.O. Box 431, Dillon, S.C. 29536.
