Audit shows Grosse Pointe City’s financial records in good shape

By: K. Michelle Moran | Grosse Pointe Times | Published February 6, 2019

GROSSE POINTE CITY — Grosse Pointe City’s most recent audit, for the 2017-18 fiscal year, shows that the City’s financial reporting is in good order.

“It was a clean opinion,” Spencer Tawa, one of the Plante Moran auditors who worked on the report, said during a Dec. 17 City Council meeting. “That’s the highest level of assurance that we can give. … The numbers can be relied on.”

While, as Tawa noted, the audit isn’t a statement on the City’s financial health, it does show that the records are being kept properly.

Tawa said the auditors “did not note any internal control matters” that they needed to point out, nor did they find any errors in financial reporting that required correction.

“That is definitely something for the staff to be proud of,” he said.

General fund revenues have been “steadily increasing” over the past four years, Tawa said. Property tax revenue is the City’s main source of income, accounting for an estimated 70 percent of the total, he said.

The general fund balance decreased by about $1 million last year to purchase the property for the new public safety building, Tawa said. City Manager Pete Dame pointed out that this amount “will be reimbursed by the bond” that voters approved for new public safety, public works and municipal court facilities. As of the end of the last fiscal year, on June 30, 2018, the general fund’s unassigned fund balance was just over $1.513 million, which is still in keeping with the City’s policy of maintaining a fund balance equal to about 25 percent of the general fund budget.

Tawa said that in 2014, the City’s pension system was 135 percent funded. As of June 30, it was 94 percent funded, which he said was “still a healthy (number).” However, that’s a drop from previous funding levels; in 2017, the pension was just under 119 percent funded, while in 2016, it was about 107 percent funded.

Post-retirement health care benefits are now recorded as a liability on municipal audits. Retiree health care “is definitely a significant liability” for the City, said Tawa, pointing out that the City is only about 4 percent funded in that area — it has about $700,000 set aside for it, but roughly $18 million in anticipated costs over time. Retiree health care was 6.2 percent funded in 2017 and 7.47 percent funded in 2016, according to the audit.

“We’re well-funded on the pension,” Dame said. “We’re not well-funded on retiree health care.”

The City isn’t alone in that regard. Many municipalities have long covered those costs on a pay-as-you-go basis.

Officials note that the City has taken steps to address the retiree health care issue.

“Even though the numbers may look more anemic … we’re getting through this wave of retirees and our future liabilities are lessening,” said City Councilman Christopher Walsh, observing that newer employees don’t have these retiree benefits.

In recent years, the City has had “a lot of retirees who have had significant pensions,” Walsh said.

Tawa thanked City staffers and administrators, including Dame and Finance Director/Treasurer Kimberly Kleinow, for their cooperation during the audit.