St. Clair Shores City Council hears audit presentation

By: Kristyne E. Demske | St. Clair Shores Sentinel | Published January 9, 2018

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ST. CLAIR SHORES — The city’s audit report from Yeo & Yeo showed a balance sheet that is “overall pretty consistent from one year to the next,” according to David Youngstrom, a CPA with the firm.

St. Clair Shores had revenues over $31 million for the fiscal year that ended June 30, 2017, with expenditures of about $35 million, leading to a fund balance deficit of about $3.9 million. Of that, however, about $1.4 million will be returned to the general fund when St. Clair Shores is reimbursed for the U.S. Department of Housing and Urban Development, or HUD, loan for the Senior Activities Center renovation and expansion, bringing the deficit closer to $2.5 million.

The general fund balance is $11 million, down from $15 million at the end of the previous fiscal year.

“We, in essence, instead of taking draws on building that (addition), we took a lot of money out of the general fund so once we get that money,” we will pay it back to the general fund, Mayor Kip Walby said. 

According to the report, the five-year economic projection for St. Clair Shores shows revenues relatively flat going forward with expenditures rising 2-4 percent. 

In the utility fund, Youngstrom said that many projects were begun later in the fiscal year that will be completed in the next fiscal year, leading to a gap between revenues and expenditures. But this year, in looking at all of the city’s internal operations, there were no material weaknesses found.

“Last year, we had a significant deficiency related to the grant guidance,” he said. “That’s been corrected. (There is an) ongoing process of checks and balances to make sure that we are safeguarding the city’s assets.”

St. Clair Shores is facing some of the same challenges that all public entities are facing with declining revenues and increasing costs. 

“We spent some of our fund balance this year. We plan to spend a little more in (2017-18),” Youngstrom said, pointing to escalating health care costs, $78 million in unfunded post-employment benefits and $88 million in unfunded pension obligations, along with aging infrastructure, as challenges.

“Most every city, that pension obligation is hitting the way this is,” he said. 

Nevertheless, Walby said that “it was a good year."