Audit Shows 'Good News' for City's Reserves

An audit of Powder Springs’ finances from last fiscal year, which ended June 30, 2010, shows almost $2.2 million in expendable funds, called “unreserved and undesignated.”

That equates to about five months of operating expenses for the city, said Tammy Galvis, a partner with Moore & Cubbedge, the accounting firm that did the audit.

Governments are recommended to have about two to three months of funding for expenditures on hand, Galvis said, adding that amount is approximately what the city had from the fiscal year that ended in 2009.

“I’m pleased to see the reserve fund,” Mayor Pat Vaughn said at Monday’s work session, where the audit was presented.

“Yes, that is good news,” Galvis said.

At the council meeting following the work session, Councilman Tom Bevirt said: “People should know, I don’t think we’ve been in that shape for years, have we?”

“This is true, and we did the cuts and the sacrifices that we needed to do so that we would be prepared for the upcoming year,” Vaughn said, referring to the drop in revenue that is expected from declining property values.

At the work session, Bevirt inquired about setting aside unreserved and undesignated funding for revenue losses.

Galvis said that is something to look into, but she also said the city needs to be aware that some of the $2.2 million is in assets.

“Fund balance does not equate to cash in the bank, so keep that in mind,” she said. “So it’s not like you could take a certain amount. But it is something to consider.”

The audit report also shows a little more than $400,000 in reserve funding.

Reserve funding is not available for discretionary spending, while unreserved and undesignated funds are more expendable, according to auditorcontroller.org.

The audit also shows that the city overestimated its revenues for the general fund from last year by about $29,000—a predicted $7.574 million verses the actual $7.545 million.

The city’s expenditures, though, were underestimated and by a much larger amount. The budget had called for $7.535 million to be spent; $7.150 million actually was, meaning the city saved about $385,000 in projected expenditures.

“Of course you made some cuts last year, so your expenditures were down about a half million dollars from the prior year,” Galvis said at the work session.

Revenues were up about $100,000 from the previous year, Galvis said.

Also in the audit, the city’s water and sanitation lost about $116,000—$92,000 from operating expenses and $24,000 from non-operating expenses.

Galvis said that water and sewer rates were raised, but they weren’t raised enough to cover costs. She also said that Postemployment Benefits Other Than Pension, or OPEB, also factored into the loss. 

Also operating at a loss was sanitation. Between operating and non-operating expenses, the department lost $10,386.

The audit's findings are attached to this article.