Eastpointe reviews finances for 2019 fiscal year

By: Brendan Losinski | Roseville - Eastpointe Eastsider | Published December 9, 2019

Advertisement

EASTPOINTE — On Nov. 26, auditing firm Plante Moran presented its annual financial analysis of the city of Eastpointe to the City Council.

City officials said the report largely was what they were expecting and that it confirmed the slow but steady process of financial correction and improvement that the community has been on for the last several years.

“The city of Eastpointe has won budgeting awards for this financial reporting, and we are headed in that same direction this year,” said interim City Manager Ryan Cotton. “The city is on strong financial footing once again, which has enabled it to make capital improvements possible and has contributed to addressing its unfunded pension liability.”

Cotton said the Plante Moran report shows that everything is functioning properly in the city in regard to its finances.

“They stressed the need for quarterly reporting, and council received the first quarterly report last month, and it’s all showing that bank reconciliations are where they need to be,” he said. “This is when you reconcile the bank statement with what the city’s ledger says, so that means everything is matching up and our reports are accurate.”

According to the report, Eastpointe’s general fund revenue increased from $23,142,000 in the 2018 fiscal year to $24,017,000 in the 2019 fiscal year. However, general fund expenditures also increased in that time from $22,110,000 to $23,642,000. These expenditures did allow the city to moderately increase its fund balance, which is the amount of money the city saves in case of unforeseen costs, from $12,043,000 to $12,419,000.

Also notable was Eastpointe continuing to keep its water and sewer expenses less than its water and sewer revenue, which had been an issue for the city between 2015 and 2017. The city also continued to put more money into its pension and post-employment benefits liability, which city officials said is the biggest financial issue that the municipality is grappling with.

Eastpointe Mayor Monique Owens said that the pension and post-employment benefits are a crucial issue and one that the local government must continue to take great care to address.

“I think we are in a good place based on the report from Plante Moran, but what I have been talking to people about is getting us more into a position where we can pay more into our pension fund,” she said. “Having worked for the city of Detroit, I saw people who worked for many years who then couldn’t get their pension, and I don’t want the people who put their time and energy into Eastpointe to ever have to suffer through that.”

Cotton agreed, but added that new state regulations mean having to raise the bar in regard to funding pension and post-employment benefit costs.

“The greatest financial challenge is still our unfunded pension liability,” he said. “The state has new requirements we have to meet, and new ways of calculating that unfunded liability. The funding for pension and other post-employment benefits are continuously going up, so we still have some financial challenges with these long-term obligations, even though our financial status is greatly improved overall.”

Cotton said the improved financial footing that the city is standing on is the result of measures and cuts made by Eastpointe following the 2008 financial crisis.

“We went through significant employee pay and benefit cuts, which bought us some leeway,” he explained. “The biggest reason for our improved position is our police and fire special millage. If not for that, we would have gone broke in recent years.”

Owens said she sees the report as good news and proof that the incremental improvements the city has been making are adding up.

“I’m always optimistic,” Owens said. “I think we have a lot of opportunities and options. … I think we have been doing a great job with our roads and our infrastructure. We have been saving a lot of money with our new director of public works, Jose Abraham, so we could put more money into local streets.”

Cotton agreed and said the city is finally able to put more money into areas such as roads and other capital improvements.

“I think our greatest strengths are that, based on our financial models, the tax revenue and other revenue sources are keeping up with our increasing needs. It’s improved to the point where we can help contribute to capital improvement projects.”

Advertisement