GLADSTONE - Department heads and other Gladstone city officials have a better grasp on the city's financial health, following Tuesday's special audit meeting. The meeting revealed both positive and negative aspects of the city's finances during the 2010-11 fiscal year, as well as an unexpected boost to the general fund.
Raymond LaMarche, CPA (Certified Public Account) with Anderson, Tackman and Co., PLC, along with City Manager Darla Falcon, led the meeting. It began with an outline of the extra $160,000 in the general fund.
"You can see the fund balance of the general fund went up $160,000, which is substantial," said LaMarche. "This year's increase really becomes all unrestricted monies. It doesn't relate to a one-time donation, which is obviously a positive trend."
According to Falcon, the money originated from $62,500 more in revenue from sources like the seasonal dockage at the Gladstone Harbor, as well as the Gladstone Bay Campground. Fewer expenses were also enjoyed by the city.
"If you remember, when we were putting this budget together it was all over the board what the state was going to do with that (sales tax cuts), so it was really hard to budget a number in there," she said. "I budget conservatively when it comes to the state, so we brought in $46,000 more."
Other expenses that didn't materialize in the budget came from departments that didn't spend their allotted amount, a skipped extra payment to the Municipal Employees Retirement System and a less expensive repair to the city hall roof.
"On the expense side, we probably didn't do a few things that we should have that were in the budget," explained Falcon. "Are we going to pay for that in the future? Maybe; maybe not."
An additional $64,000 from the Michigan State Housing Development Authority Habitat Rehabilitation fund, as well as revenue for the city's anticipated timber sale, will also soon appear in the general fund, LaMarche noted. The MSHDA fund dollars, he explained, were meant to cover the city's cost of administering the grant dollars, but were never transferred.
Renee Barron, community development director and zoning administrator, pointed out the money would be transferred now that the grant has been completely spent.
"It's usually done at the end of each year, but we had three different city managers in a short period of time, and it just didn't happen," said Barron. "We knew it was sitting there we didn't want to transfer it until everything was closed, because we were so close to closing."
The negative aspects of the city's audit include a continuing problem with their MERS contribution, which is not what it should be, according to MERS standards, said LaMarche. Because of this, the city will have to catch up over the next couple of years to fully fund its retirees.
"When I did the rough calculation I think you're looking at a $200,000 increase in the next four years in a required contribution to MERS," he said.
Other problems found during the city's audit were detailed in a 10-page report from the auditors. The report included notes from the auditors and the city's management response to problems with: unreconciled light deposits in the utility system; timely distribution of real, personal property and industrial facilities taxes; budget non-compliance in expenditures exceeding appropriations; dated miscellaneous accounts receivable balances; the lack of approval on electronically signed checks; cash variances and the timeliness of bank reconciliations; the approval of journal entries by the city treasurer; a lack of listing of accounts receivable; the allocation of the Downtown Development Authority's capture of city taxes; the approval of utility billing adjustments; and the lack of documentation of the expenditures of the street funds.
According to Falcon the majority of the problems are related to the decrease in staff members and the workload required of those still employed by the city.
"I'm only one person. We're all only one person, and we can only do so much," she said. "It is what it is - let's fix it and move on."
Barron seconded that thought, noting the community's response to the troubled economy siphons away valuable time from employees.
"With the economy down, and services being cut, that creates more traffic in here (city hall)," she said. "(This) creates staff time being dedicated to trying to help the public understand, which decreases the time we can spend on functional things."
City commissioners present during the meeting commended Falcon and the rest of the department heads for their time and effort in regard to the budget, streamlining their departments and contributing, despite limited resources and funding.
"You're short-staffed and you're trying to accomplish things, and it's literally impossible to do certain things to make you perfect," said Commissioner Hugo Mattonen. "As much as you want to do it, it just can't happen. But you still strive toward that."