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November 28, 2012

Berkley goes ‘above and beyond’ on latest audit

By Jeremy Selweski
C & G Staff Writer

BERKLEY — The city’s financial audit for the 2011-12 fiscal year includes a new achievement that provides a greater degree of budgeting transparency and detail than ever before.

For the first time, Berkley officials prepared a Comprehensive Annual Financial Report (CAFR) along with all the required audit information for their independent auditors at Plante & Moran. According to Finance Director David Sabuda, the CAFR contains much more data than a standard financial report, including budget information from the Berkley Downtown Development Authority, a variety of new statistics and other supplemental data.

During the City Council’s Nov. 19 meeting, Sabuda took time to thank all those involved with the audit process. “This was a true team effort,” he said. “We could not have pulled this off without everyone stepping up to the plate and giving their best effort. It was just tremendous, and I’m thrilled for the community and glad that we were able to do it.”

City Manager Jane Bais-DiSessa added that she was “very honored and very pleased to inform you … that this is the first time that the city of Berkley has ever presented a CAFR. In Michigan, this is not something that is required … but the CAFR goes above and beyond. This is truly a document that ensures complete transparency to our residents with regard to our financial statements.”

According to Beth Bialy, audit partner with Plante & Moran, a CAFR provides a large amount of statistical information, such as 10-year historical trends about a city’s revenues, expenditures, debts and assets. Now that Berkley has completed its CAFR document, the next step is for city officials to formally submit it to the Government Finance Officers Association (GFOA) in order to be awarded official CAFR designation.

“The CAFR is something that’s really a national award from the GFOA,” Bialy explained. “It really kind of puts you in a different league when you prepare a CAFR. … The GFOA has a group of people who will actually go through the report with a fine-tooth comb, and then hopefully, you’ll end up with the award. I know that this was a lot of work and a lot of effort, but we’re keeping our fingers crossed that it pays off.”

For Councilman Steve Baker, though, this type of recognition would merely be icing on the cake to providing a more complete budgetary picture for Berkley residents, officials and business owners.

“I do think that the value of having this additional transparency, of having this information, transcends any (awards),” he said. “Sure, it would be great if we received this award, but I think (the CAFR) is really about having better understanding and better clarity so that we can make fact-based decisions. I have every confidence … that that was the motivation to push ourselves to go above and beyond the requirements.”

The City Council received more good financial news Nov. 19, in addition to the CAFR. They also learned that Berkley had received an unqualified opinion on its 2011-12 audit, which is the best rating that an independent auditor can give when inspecting an organization’s financial statements.

“Once again, the city did receive a clean audit opinion this year,” Bialy said. “In total, you just squeaked by … and that’s the good news, especially in this economy.”

Bialy explained that, while the city’s property tax revenues continued to decline in 2011-12, along with the revenues in its major and local streets funds, water and sewer fund and solid waste fund, its general fund balance — which now totals nearly $3.1 million, including close to $2.5 million in unrestricted revenue — has increased during each of the last two years. In addition, although Berkley’s general fund revenues came in about $75,000 over budget in 2011-12, its general fund expenditures came in more than $300,000 under budget, mostly due to decreases in health care costs.

Bialy credited Berkley officials for being conservative with their spending, while simultaneously contributing to financial obligations like retiree health care benefits and pension costs. She also praised them for making new investments to city infrastructure and equipment, which accounted for about $1.7 million in 2011-12.

“I think you’ve done a really admirable job of keeping an eye on expenditures and also doing what you can to impact your legacy costs,” she said. “Those costs have increased over time, but the increases have been reasonable. The other thing that really came to light in the audit was that … even in these challenging economic times, you’ve been able to continue making investments in the community and be fiscally responsible in paying down your debts.”

Mayor Phil O’Dwyer thanked city officials for making difficult sacrifices and Berkley residents for approving the city’s recent 3-mill Headlee override proposal by greater than a two-thirds majority.

Responding to Bialy’s remark about Berkley barely squeaking by in 2011-12, O’Dwyer stated, “Let me tell you how we squeaked by: a lot of cutting of programs and services, and cutting things that we really didn’t want to cut. But the numbers forced those kinds of cuts. On the other side of that, we are enormously grateful to the residents of this community for passing a millage in August. That gives us a little wiggle room to correct some of the items that we had to defer because we simply didn’t have the money.

“I, too, want to congratulate the entire team that produced this very intensive, careful, well-documented audit,” the mayor concluded. “I think we come out very well, as a city. The management of the city’s purse has been well-done.”

To view Berkley’s 2011-12 Comprehensive Annual Financial Report, go to www.berkleymich.org and click on the “City Finance” tab. For more information, call (248) 658-3350.

You can reach C & G Staff Writer Jeremy Selweski at jSelweski@candgnews.com or at (586)218-5004.