Grosse Pointe Farms gets awards, top marks for its audit

By: K. Michelle Moran | Grosse Pointe Times | Published January 8, 2019

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GROSSE POINTE FARMS — Grosse Pointe Farms officials received good news in the form of the annual audit of the city’s finances for the 2017-18 fiscal year.

The city’s auditors from Plante Moran delivered the results of their report during a Dec. 10 City Council meeting

“The city received what we refer to as an unmodified opinion … which is the highest level of assurance that we can provide,” said Bill Brickey, a partner at Plante Moran.

City Controller/Treasurer Debra Peck said that was good news.

“We’re very pleased about that,” she said.

In the last fiscal year, Peck said, the Farms added more than $150,000 to its general fund balance and settled a class action suit over basement sewage backups, a cost being paid for through bonds for which the city “got a very favorable (interest) rate” because of its AAA bond rating — the highest bond rating possible.

The total fund balance at the end of the last fiscal year was just over $5.3 million, Peck said. The audit shows that the unassigned fund balance was more than $3.99 million.

“The most significant portion of our revenue does come from property taxes,” Peck said.

The Farms has experienced increases in taxable value over the last three years, she said, but because those increases are capped at 5 percent or the rate of inflation — whichever is lower — the city hasn’t been able to recover the revenue it lost during the Great Recession and housing market collapse circa 2008. In 2018, Peck said, the increase in taxable value was 1.8 percent.

“(Because) health care costs and so many other costs are going up so much more than 1.8 percent, we have to be very mindful of all of our (expenditures),” she said.

As to city pension plans, the one for public safety was 104 percent funded as of the end of the 2017-18 fiscal year on June 30, while the one for general employees was 87 percent funded. Peck said that makes both plans “very well-funded.”

On the retiree health care side, public safety is funded at 45 percent and the general retirees plan is funded at 23 percent. All new employees hired after July 1, 2007, contribute to a health savings account and will be able to use that to pay for health care coverage after retirement, as retiree health  care from the city will no longer be provided. Given that many cities have used a pay-as-you-go model to cover retiree health care costs, “we are ahead of many communities … and we are making positive progress” to being even more fully funded, Peck said.

2018 marked the 25th straight year the Farms has received an award for its Comprehensive Annual Financial Report, a more detailed audit report that includes historical and other data and offers readers a thorough look at the city itself and its finances. The honor is called the Certificate of Achievement for Excellence in Financial Reporting and is awarded by the Government Finance Officers Association of the United States and Canada.

Residents receive a copy of the city’s Popular Annual Financial Report, a brochure-sized summary — included inside the most recent issue of the Farms newsletter — that provides a concise, user-friendly overview of the city’s finances.

“I think this just shows the city’s commitment to financial transparency and excellence,” Brickey said.

Mayor Louis Theros thanked Peck and other members of the Finance Department, as well as City Manager Shane Reeside, for another successful audit.

Brickey thanked city administrators and staff, including Peck and Reeside, for their assistance and cooperation during the audit process.

“They always do a great job,” Brickey said. He said the auditors usually spend about two to three weeks reviewing the city’s financial records.

Peck said the Farms would be applying for an award again for its CAFR and PAFR. If the city receives them, as anticipated, this would be the 26th and seventh year, respectively, that the Farms was honored for these documents.

To see the audit or the PAFR, click on the Finance tab on the city’s home page at www.grossepointefarms.org and look under the Budget and Comprehensive Annual Financial Report section.

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