Clean audit reveals boost in general fund reserves

By: Eric Czarnik | Sterling Heights Sentry | Published January 12, 2022

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STERLING HEIGHTS — An auditing firm had no complaints over Sterling Heights’ recent financial reporting of the 2020-21 fiscal year budget, which showed a greater-than-projected increase in general fund reserves, city officials said. 

During a Dec. 21 City Council meeting, City Controller Nick Makie said the city’s 2020-21 overall net position — or total assets after total liabilities are subtracted — was $190.4 million, with general fund revenue making up $116 million and general fund expenses making up $113.7 million. This left $2.3 million in reserves for the general fund’s reserves, increasing it to $32.2 million, which is about 28.4% of spending. Makie said this was “greater than projected.”

Makie attributed the revenue boost to increased tax revenue, as well as $6.6 million in additional state and federal funding, with COVID-19 relief funds making up a significant share. An extra $3.1 million in additional fund transfers for things like road and facilities projects was partially responsible for additional spending, Makie said. He added that every city department came in under budget. 

General fund revenue and spending in the 2020-21 budget each increased compared to the prior year by  $6.3 million and $7 million respectively, Makie said. General fund revenue was 100.1% of expectations, and spending was 98.7% of expectations, he said

Makie added that the city has prioritized attention toward three city retirement funds pertaining to pension and retiree medical plans. The retirement funds are in much better shape due to well-performing investments, he explained. For instance, the Other Post-Employment Benefits plan rose from 55.9% funded to 78.2% funded in a year’s time.

“As you may remember, the equities market was still in a downturn as of our prior measurement date of 6/30/20, and the asset values reflected that market dip last year,” Makie said. “The investments have rebounded, and our funding in all of our plans has increased significantly.”

Makie also compared Sterling Heights to other communities. In 2020-21, Sterling Heights taxes averaged at $572 per resident, below the figures of $653 and $724 for Troy and Warren, respectively. The city’s millage rate is 16.21 mills, below the county average of 21.97 mills. 

“The bottom line is the audit results show the city’s budgeting and long-term financial planning is on target,” Makie said. “We’re continuing to add to general fund reserves, ensuring adequate resources will be available to weather any current and future economic uncertainty. And we are continuing to invest in roads and community infrastructure.

“And all of this is accomplished while still maintaining the lowest taxes paid per resident when compared to the largest cities in Michigan by population, and we continue to have one of the lowest millage rates in Macomb County.”

Plante & Moran gave the audited financial report the highest ranking of “unmodified.” Sterling Heights also got kudos from the Government Finance Officers Association for the city’s financial reporting and budget presentation.

Sterling Heights Mayor Michael Taylor thanked the presenters, as well as the finance staff, for their hard work. He said that while some community members have demanded audits of the city’s finances, the city has been doing that for decades, “and we always seem to do pretty well.”

“I guess I would say it’s old hat at this point,” Taylor said. “This is my 12th or 13th one of these, and they’re pretty boring, even by accounting standards. We always just seem to have clean financial statements.”

Find the audit report by visiting sterling-heights.net, or call (586) 446-2489 to learn more about the city.

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