NY Mills audit shows ‘positive trends’
An audit recently completed in New York Mills shows that the city is in good financial shape, with a growing fund balance and rising operating revenues, coupled with decreasing expenditures.
Brian Stavenger, a CPA and partner with auditing firm Eide Bailly, was at the New York Mills City Council meeting last week to review the 2012 audit.
At the end of the year, Stavenger said, the city had $2.7 million in cash and investments, a healthy amount that the city has worked to build up over the last several years.
“It really shows an investment that the city has made,” he said.
Also, the city’s reserve fund is up to about $850,000 – or nearly 95 percent of New York Mills’ total annual operating costs. Stavenger said that’s above where it needs to be; the Minnesota State Auditor recommends cities keep enough in their reserves to cover about 35-50 percent of their annual expenses.
“There are some good solid reserves in that general fund,” said Stavenger.
A positive fund balance contributes to a favorable bond rating, produces investment income, provides a source of working capital to meet cash flow needs and offers a cushion for unexpected expenditures or revenue shortfalls.
Stavenger said it’s not unusual for cities like New York Mills, which operate on a cash basis, to have higher-than-average reserves. Minnesota allows cities with populations under 2,500 to operate on a cash basis, as it’s a simpler accounting method.
In addition to the general fund, other city funds are showing upward trends, as well: revenues from the liquor store and water, sewer and gas fund increased from 2011 to 2012.
In all, the city came out ahead of its projected budget for the year, with 8 percent more income than projected and almost 7 percent fewer disbursements and thus more money in the fund balance than expected.
“There are some nice trends here,” said New York Mills Mayor Julie Gerber.
The city’s long-term debt has gone down to about $4 million, or $6,000 per citizen, according to the audit. That’s higher than the typical $3,000-$4,000 per citizen average in comparable cities, but Stavenger said it reflects some significant improvements made to New York Mills infrastructure in recent years. He said the higher debt load was not a major concern, since the city has enough revenue sources to cover it.
“I think, overall, there are good, positive trends,” said Stavenger. “Nothing really alarming jumped out during the audit process… All in all, a very good audit for 2012.”