Grosse Pointe Shores audit shows city retains strong fund balance

By: K. Michelle Moran | Grosse Pointe Times | Published March 8, 2023

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GROSSE POINTE SHORES — Echoing a sentiment likely held by other financial professionals, Grosse Pointe Shores Mayor Ted Kedzierski — a certified public accountant and attorney — declared, “It’s always the highlight of the year,” when the city’s auditors appeared in front of the Shores City Council Jan. 17.

And indeed, the report did produce good news, in the form of an “unmodified opinion.”

“That is what you want to see,” said Shores auditor Aaron Stevens, of Maner Costerian, calling an unmodified opinion “the highest level of (opinion) we can express.” It means the city’s financial reporting is accurate.

Stevens said the auditors appreciated the assistance they received from Shores administrators.

“Our thanks to the administration for their courtesy, cooperation and assistance,” Stevens said.

As of the end of the last fiscal year June 30, the Shores had an unrestricted general fund balance of about $2 million, Stevens said.

“That represents approximately 37% of your operating expenses for the year,” Stevens said.

He said government auditors recommend maintaining a fund balance equal to at least two months’ worth of expenses, or about 17% of the budget.

“Your general fund is in sound financial condition. … I would not say that 37% is excessive,” Stevens said. “You’re healthy. You’re in good condition.”

He said the city added more than $151,000 to its fund balance last year.

Not surprisingly for an almost exclusively residential community, Stevens said the Shores received 81% of its general fund revenue from property taxes.

The city’s pension was roughly 80% funded as of June 30, 2022, but retiree health care — which is classified under other post-employment benefits, or OPEB — was only about 15% funded. These data were as of Dec. 31, 2021, Stevens said.

“So our (current) liability is in fact much greater than it is here?” City Councilman Donn Schroder asked.

Stevens said this was true, but the city wouldn’t know exactly how much its liability was until the next actuarial report was completed.

“Aaron, good work,” said Kedzierski. “We know we have some work to do, but overall, good accounting.”