The Dillon City Council recently received their audit report for the year ending June 30, 2014.
The audit report was prepared by Kenneth Cobb & Company, P.C., Certified Public Accountants.
The financial highlights included the following:
-The assets of the City exceeded its liabilities at fiscal year ending June 30, 2014 by $36.1 million (net position). Of this amount, $4.8 million may be used to meet the City’s ongoing obligations to citizens and creditors.
-The City’s total net position increased by $175,533 (includes prior period adjustment of $76,140)
-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 $200,087 in comparison with the prior year. Approximately 66 percent of this total or $2.5 million is unassigned fund balance.
– The City’s total bonded debt decreased by $1.0 million during the current fiscal year. There was no new debt issued during the year.
Other information provided includes:
Changes in Net Position
The City’s net position increased by $175,533. Approximately 17 percent of the City’s total revenue came from property taxes, while 13 percent resulted from grants and contributions (including state and federal aid). Charges for various goods and services provided 62 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 $719,000 compared to the prior year. Total expenses increased $523,000 compared to the prior year. Some of these increases can be attributed to a full year of golf course activity. The City showed an increase in net position of approximately $212,000.
Business-type activities
Total revenues increased $305,000 compared to the prior year. This increase was due to grant revenues received by the City. Total expenses increased $292,000. The City had a decrease in net position of approximately $37,000.
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 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 38 percent of total governmental fund expenditures.
The fund balance of the City’s general fund decreased by $230,000 during the current fiscal year. This is a 8 percent decrease over the prior year fund balance.
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, 2014.
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, 2014, amounts to $59.1 million, less accumulated depreciation of $27.3 million, leaving a net book value of $31.8 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 increase in the City’s investment in fixed assets for the current fiscal year was 2.9 percent in terms of net book values. Actual expenditures to purchase or construct capital assets was $2.3 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: police department-additions to shooting range, three police cars, and six vehicles received thru the federal 1033 program, code enforcement-one truck, street department-one truck and lawn mower, fire department-one fire truck, wellness center-walking trail, water and sewer-one truck, one high pressure water jetting unit, and many improvements to the water, sewer, and wastewater treatment plant systems.
Debt Activity
The City of Dillon’s total debt decreased by $1.0 million during the current year.
The following is taken from the Dillon City Council minutes about the presentation made at a recent meeting:
Smith Brooks of Kenneth Cobb & Company presented the city’s audit report for the 2013-2014 fiscal year. He said the city had received an unqualified, clean, opinion again this year. The audit included three reports since they had also qualified for a single audit due to federal funds, mostly from CDBG, in excess of $500,000.00 due to the water line project. Smith said there are some significant deficiencies in the report, which were the same as last year and detailed in the management letter. These were control deficiencies that did not meet a significant level and had been discussed in the audit meeting. Management is aware of these deficiencies and will address them accordingly. Smith then began to highlight numbers from the General Fund and the Water & Sewer Fund. On the General Fund balance sheet cash and investments decreased by about $36,000; total assets decreased by $191,000; unassigned fund balance was $2.5 million or 169 days of the FY2014 budget. The General Fund had a deficit of $230,000 in expenses over revenues due to the unbudgeted purchase of a fire truck. In the Water & Sewer Fund cash and investments decreased by $1 million; total assets decreased by $823,000; revenues decreased by $180,000; operating expenses increased by $308,000. The only long term debt they have is the Wellness Center at $2.2M in the General Fund. The Water & Sewer note for the wastewater treatment plant will expire in March 2016. Smith also informed Council of a new GASB statement concerning State retirement in which cities may be required to pay ahead to insure that retirement funds are available. This could be a very expensive process and the City may have to look at other means of retirement savings, such as a matching 401K. Councilman Wallace asked about the expenses for repairing the Perdue line. Smith said these were taken from the unrestricted funds but they could be reimbursed from the restricted funds. Finance Director Janet Bethea said she had not transferred the funds because she was waiting for the project to be fully completed and there was another phase left to complete. There were no other questions and Council thanked Smith for the audit report.
Next Year’s Budget and Rates
The City has approved a balanced budget for the fiscal year ended June 30, 2015. The following are some of the factors considered in preparing this budget:
The City increased its Sanitation rates to help cover the increase in gasoline and diesel costs
The City leased the Twin Lakes Golf Course and is using 2% Hospitality Tax funds as needed to help operate the course. Dillon County gave the City $50,000 during FY-14 to help operate the golf course. Council approved for management to transfer Hospitality Tax funds up to $15,000 per month without getting additional approval from Council.
The City’s water and sewer rates were not increased. The City continues to have major repairs on its wastewater system because equipment needs replacing and has not been updated in a number of years.
Any questions about the audit should be directed to the City of Dillon.
