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City fund balance jumps, finance report makes highest grade

December 12, 2012

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Though the city’s unassigned fund balance has jumped to $23 million, city leaders cautioned that it wouldn’t stay that high for long.

Tom Darling, director of financial services for the city of Troy, presented the Comprehensive Annual Financial Report to the Troy City Council at the Dec. 3 meeting. The Rehmann Group reviewed and audited the report for the period that ended June 30, 2012, and gave the city an “unqualified” or “clean” opinion: the highest opinion that can be issued.

“This represents a significant accomplishment by government and management,” Darling said.

“The audit went very well,” Paula Bedford, of the Rehmann Group, told the council. “This is due in part to the great staff under the direction of Tom Darling,” she said. “There were no difficulties encountered by team members.”

The city also received the Government Finance Officers Association Award for Outstanding Achievement in Popular Annual Financial Reporting. This is the 15th consecutive year the city received this award.

The council approved a $133 million budget for 2011-12. General fund expenditures for 2011-12 were $45.8 million.

Highlights of the report included a reduction in general-fund expenditures from $53.7 million in 2010-11 to $45.8 million in 2011-12.

While revenues decreased $2.3 million, due to reduction in property tax revenues because of declining taxable property values, this was offset by a decrease in expenditures of $7.9 million from staff wage concessions, early retirement incentives, staff reductions and delay in filling open positions. Also, the library is now funded by a separate millage and the city settled a number of tax appeals for less than anticipated.

Darling explained that, as of June of this year, the city had 294 full-time employees, compared with 341 budgeted full-time employees in 2010. He pointed out that the budgeted number of full-time employees for 2013 is 319. The city also received $520,000 more in state-shared revenue than it did last year. This resulted in a $6.4 million increase in the general-fund balance, bringing the unassigned balance to $23.3 million, or 51.6 percent of general-fund expenditures.

However, Darling explained that, due to projected budget shortfalls because of flat property tax rates and increasing expenditures, the unassigned general fund balance was projected to drop to $10 million in 2015. The city policy has been to maintain an unassigned fund balance of 15 percent of general-fund expenditures. For the 2010-11 fiscal year, the unassigned fund balance was about $12 million.

While Sanctuary Lake Golf Course revenues ($376,756) were more than operating expenses ($105,436), the golf course still posted a deficit, due to a depreciation expense of $298,695 and debt funding. The golf course ended with a loss of $379,000, compared with a $583,000 loss in the 2010-11 fiscal year.

“This is the first year that revenues have been in excess of expenses,” Darling said of Sanctuary Lake. He credited the city for outsourcing operations at the two city-owned golf courses to Billy Casper Golf, and the warm winter last year for the revenue increase.

Warm weather also accounted for the $234,000 in revenue at Sylvan Glen Golf Course: $14,000 more than the 2010-11 fiscal year. Revenue at the Troy Family Aquatic Center also increased $74,000 from the last fiscal year.

The CAFR will be available online at the city website, Hard copies will be available at the Troy City Clerk’s Office, 500 W. Big Beaver, and at the Troy Public Library, 520 W. Big Beaver.

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