The city of Owosso received a “clean opinion” on the audit for the fiscal year ending June 30, 2021 during the regular meeting Monday, Jan. 3 – the first meeting of the New Year.
Gabridge & Company auditor, Joe Verlin, offered a presentation on the audit to council members in attendance. A “clean opinion” from an auditor is a positive, indicating the auditor believes the financial statements provided from the municipality have been fairly and accurately presented and its financial position is “clean” of misstatements.
Verlin stated the city saw $2.1 million in revenues over expenses with an increase to the fund balance of $799,335. Also significant, the audit ending June 30, 2021, represents the last report including the city’s single employer pension plan – since those funds were moved to the Municipal Employee’s Retirement System of Michigan (MERS) in 2020. MERS now manages that pension plan and the city saw a 13.9 percent return on investments.
Verlin offered that the city had $67.8 million in restricted funds/assets that included infrastructure and non-spendable assets with just over $7 million in unrestricted funds across all city funds, showing a representation of the city liquidity.
Total general revenues, Verlin shared, were at over $21.8 million with expenses at $19.741 million, showing an increase in the net position of just over $2.1 million. “This means you’re operating at a sustainable level,” Verlin said, continuing to explain that the fund balance was $13.398 million, seeing an increase of over $41,000 from the previous year – in short meaning that “cash in” had exceeded “cash out.”
Under assets and liabilities, cash and investments increased from $16.6 million in June 2020 to $17.12 million in June 2021.
The city’s net pension liability, as mentioned above, decreased from $5.78 million in June 2020 to $4.3 million in June 2021.
“There is a number of different moving parts and pieces driving that number down,” Verlin said, “The last two years, the city has earned 14 percent and 13.9 percent on pension assets, which is certainly helping drive that number down.”
Regarding total pension liability, the city can expect over $46 million over the next 30-50 years, though there is currently $41.8 million put aside to cover that liability, so the pension is over 90 percent funded.
In discussing the general revenue section of the audit, Verlin stated that property taxes increased from 4.84 million up to 4.94 million, seeing taxable values going up and property taxes going up. He called it a “healthy sign.”
Verlin detailed several more pages of the audit for council members. At the end of his presentation, council member Nick Pidek inquired if there were any financial areas council should watch, mentioning infrastructure as a non-spendable asset. Verlin explained three different components to watch regarding net position and infrastructure – suggesting the city continue to monitor how much is being charged for water and sewer services.
Owosso City Council unanimously voted to accept the audit. A copy of the audit ending June 30, 2021 will be kept on file in the city clerk’s office at city hall and also at the Shiawassee District Library.
