QUESTIONS ABOUT THE CITY’S JUNE 2012 GENERAL LEDGER

Guest Column 

by  Stacy Bjorhus

Former Finance Director at city of coatesville

QUESTIONS ABOUT THE CITY’S JUNE 2012 GENERAL LEDGER

The City of Coatesville has at long last posted the 2012 Financial Reports for the months of March through June on its web site.  They were posted within the past few days.  The latest Financial Report posted to the City’s web site as of today, September 26, 2012 is the June Financial Report.  The June Financial Report is dated August 24, 2012 and it was submitted to City Council on August 27th.

The City’s August 13 Council Minutes note that the City’s outside auditor has completed their review of the City’s financial documents.  The auditors should have made the adjustments to prior year records, per GASB 34’s reporting requirements.  The July and August reports should reflect all accruals in the current year’s General Ledger to 2011 Financial Reports, and give City Council a better idea of where they stand as they roll into October 2012.

It will be interesting to review the City’s July and August Financial Statements.  What changes will have been made?

The data presented in the June Financial Report includes the following slides:

•  Finance Directors Memo to Council
•  Bank Balances
•  Accounts Payable (AP) Recap
• General Ledger Detail for the current month with Year-to-Date (YTD) Budget, YTD variance and    percent of budget received/expended YTD

NOTE:  COUNCIL IS RECEIVING JUNE FINANCIAL DATA AT THE OCTOBER 3, 1020 COUNCIL MEETING!

How can City Council make informed decisions that affect residents, property owners, commercial, institutional, industrial and community organizations with financial data that is more than two months old?  How can City Council govern the City in September (per Financials submitted at the August 27^th Council Session) with financial data from June? 

Would you consider it acceptable if you had cancer and your doctor pulled up CT scans that were two months old while giving you a current progress report on your condition?  The City’s financial condition is in dire straits.  Where are the Reports for July and August?

Aside from the prolonged delay of the Financial Reports’ submitted to Council, I have questions.  I thought that the DEM BLOG readers may have the same questions.  Hopefully DEM BLOGGERS will contact City Management or City Council and ask questions that may help the City to get on better financial footing. 

City Council, per the newspaper articles regarding the pending Trust money withdrawal, want more financial information before they make their decision.  Perhaps the reason that City finally posted March – June’s Reports is to comply with Council’s demands for more information.

Questions that I have from the slides presented by the Finance Director are below:

Director’s Memo Questions: 

•  I don’t understand why inter-fund transfers of money are called loans rather than transfers.  The City’s Drug Task Force revenues were budgeted at $60,000 but have a 6/30 YTD balance of $3,600, which at Year End should be $7,200 if you assume that Jan to June’s activity will be the same as July to December’s activity.  The Dept of Justice fines were budgeted at $235,000 with a 6/30 Year-To-Date total of $60,000, which means that at the end of the year the balance in this account will be $120,000 and $115,000 short of the 2012 Budget figure.  Codes Department revenues appear that they will fall $100,000 shy of their target at Year End.
• How will the General Fund, which is the main monetary fund that runs the City, repay the loans? 
•  Will City Management demand that the funds come from the Reserve Trust to bail out the shortfalls in the Budget?
• The Finance Director’s (FD’s) Memo to Council (see segment of Memo below) notes several revenues as low to the budget, however I disagree:
• Local Service Tax (LST): at this point in the year only the 1^st Q 2012 has been remitted to     the City.  The 2^nd Quarter LST is not due until July 30^th.  The true YTD balance of the LST is roughly $33,000 which when annualized should exceed the $100,000 annual budget for this line item.
•  Cable Franchise:  Franchise fees of $40,000 are remitted to the City on a quarterly basis, and should be slightly under budget at year end.

All other negative variances noted in the Memo should fall far short of budget; however this only highlights the City’s need to extract the transfers from other Funds as budgeted.

Bank Balance Questions: 

• What is the interest rate earned on the funds?
• Did the City submit Request-For-Proposals (RFP’s) to the area banks for quotes for banking services based on fees for service, banking products that will help the City to manage it’s financial and cash management functions?  (Night Deposit Boxes and electronic banking options expand vendor options that were available to the City.) 

AP Summary Questions: 

Payroll:  Why are the Payroll Accounts Payable stable for the first four months of the year and then from May 14^th forward (with rare exception) the dollar amounts of the monthly payments are erratic.

•  Jan – Apr:  Each Account Payable appears to be in the $7,500 range ($15,000 payments in Jan & Feb represent payment for two months of invoices) and April 23^rd appears to include a $2,000 LST payment to the City’s collector.
•  May – August (with the exception of June):  Accounts Payable in the Payroll Account are very erratic and do not follow any pattern, but they should be stable from month to month.  Why?  What is included in the payments in excess of $7,500?  What are included in those Account Payable payments that were not in the AP runs in Jan – Apr invoices.

Solid Waste:  There have been $616,000 of Solid Waste invoices paid out in 2012 through the end of August, but the Solid Waste bills (City revenue in the Solid Waste Fund) for 2012 were not mailed out to property owners until the middle of the year.

• How were the AP’s from January to May funded?  Approximately $270,000 of Solid Waste Fund invoices were paid through the middle of May, but the Solid Waste Bank Balances do not spike until the middle of May?  I do not see loans or inter-fund transfers noted.
• Were the January to May Solid Waste invoices paid with Solid Waste Fund revenues or from General Fund revenues?
•  If the Solid Waste Fund revenues supported the $270,000 expenditures then what was the source of the funds?  Were ‘Reminder Bills’ remitted to customers?  If so, what was the time frame of the Reminder Bills? 

Liquid Fuels:  Why weren’t any AP’s paid out of the LF fund from February to April.

•  How were the invoices for LF expenses paid? 
•   Did the General Fund pay these expenses?