Audit shows increases in fund balance, investment income in Grosse Pointe City

GROSSE POINTE CITY — Grosse Pointe City’s auditors again gave the municipality a clean bill of financial health.

“We want to highlight the fact that (the audit) is an unqualified or unmodified opinion,” said Martin Olejnik, of Plante Moran, as he delivered the results of the firm’s independent examination of the city’s financial records for the 2023 to 2024 fiscal year. “That means you can rely on all of the numbers.”

An unqualified or unmodified opinion is sometimes also referred to as a clean opinion.

“The books were in impeccable condition. … (City Finance Director/Treasurer) Kimberly Kleinow did an amazing job, as always,” Olejnik told the Grosse Pointe City Council during a Nov. 18 council meeting.

The city enjoyed a spike in its investment income last year, earning $68,906. That’s a jump from 2023, when the city only earned $17,967 from its investments.

“That was just due to a change in market conditions,” Plante Moran auditor Dean Hewines said.

The city’s general fund unassigned fund balance rose by over $100,000, from $1.72 million in the 2022 to 2023 fiscal year to just under $1.835 million in the 2023 to 2024 fiscal year.

As to how much the city should be keeping in its unassigned fund balance — sometimes referred to as a rainy day fund — Plante Moran auditor Spencer Tawa told the council, “It really depends on what the needs of the city are.”

Having a strong fund balance can improve a municipality’s bond rating, which means it would qualify for lower interest rates when borrowing for major projects or expenditures. A solid fund balance also means a community has money available for emergencies.

As of June 30, 2024 — the end of the last fiscal year — the city’s pension was slightly over 99% funded.

Tawa said “this is not the case” with other cities.

“The city has done a great job over the years of funding the (pension) plan,” Tawa said.

Retiree health care was only 13.2% funded, but that has been steadily increasing over the last several years; it was only 6.2% funded in 2020. Tawa said the state didn’t require contributions toward the retiree health care liability in the past, and many communities covered this cost on a pay-as-you-go basis.

“There is obviously money going into it,” Tawa said of the city trying to put additional dollars toward retiree health care. “The funding level over time has been going up.”

Olejnik said the state wants every municipality to be over 40% funded in retiree health care.

“There’s not many that are fully funded,” Olejnik said.

He said a lot of cities remain 0% funded.

“This was under the radar for all municipalities,” City Councilman Christopher Walsh said. “Suddenly (the state) sprang (this requirement) on us. … We addressed it (but) there was no way that deficit was going to be closed anytime soon.”

Walsh acknowledged the praise the auditors had for Kleinow and City Manager Joseph Valentine.

“To have the auditors say that about your work — that’s encouraging to hear,” Walsh said.