city of folly beach as · pdf filecity of folly beach ... •total sewer fund revenues...

Financial Audit Presentation Year Ended June 30, 2015

City of Folly Beach

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2015 FINANCIAL AUDIT CITY OF FOLLY BEACH

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•HIGHLIGHTS Unmodified opinion

Fund balance of the General Fund increased $60k

Fund balance of the Beach Preservation Fund increased $899k

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•OPINION The City’s responsibility: Effective internal controls

Financial statements

GF&H responsibility: Opinion – reasonable assurance that financial

statements are materially correct

Issued unmodified opinion BEST OPINION THE CITY CAN RECEIVE

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• General Fund Total fund balance

increased $60k Non-spendable Fund

balance of $31k for prepaid items

Restricted Fund balance of $78k for Victims Services

Committed fund balance of $658k for future capital outlay, claims, judgments and contingencies, and other items

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$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2011 2012 2013 2014 2015

Total Fund Balance

GENERAL FUND


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• General Fund • Unassigned fund balance is

$2.2M, which is 43.2% of 2015 actual expenditures and 40.7% of 2016 budgeted expenditures

• Unassigned fund balance includes an emergency reserve of $1M

• GFOA recommends a minimum of 16.7% (two months), but we believe the City’s should be higher – see next slide…

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0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015

Unassigned Fund Balance as a % of General Fund Expenditures

GENERAL FUND


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• Major Reasons To Maintain An Adequate Fund Balance: • Cash flow through second half of calendar year;

property taxes and business licenses are cyclical

• Significant emergencies and unanticipated expenditures

• Flexibility for discretionary funding needs

• Potential for better interest rates on debt issues (can save the City money).

• To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of the change in legislation

• Unique requirements for a beach coastal municipality.

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General Fund Revenues: • $4.4 million for 2015:

• $2.04m from property taxes • $451k in business licenses • $398k in franchise fees • $213k in building permits • $562k in intergovernmental revenues • $281k in fines and penalties • $160k in brokers tax collections • $285k for all other revenues

• $117k (2.7%) increase from 2014 • $131k increase in franchise fees due to

increase in rate from 3% to 5% • $72k increase in business licenses

related to increased sales on the island • $52k decrease in fines and penalties

due to decrease parking tickets • $45k decrease in intergovernmental

revenues due to decreased grant revenue

GENERAL FUND

REVENUES

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2011 2012 2013 2014 2015

Property Taxes Business Licenses Franchise Fees Building Permits Intergovernmental Revenues Fines and Penalties Brokers Tax Collections Other Revenues


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General Fund Revenues: • $161k or 3.8% over budget

• Franchise fees were $158k over budget due to the increase in rates from 3% to 5%

• Business licenses were $100k over budget due to continued economic growth

• Grants were $78k under budget as the City received very few grants in the current year

• Fines and Penalties were $49k under budget due to decreased parking ticket revenues

GENERAL FUND

REVENUES

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2011 2012 2013 2014 2015

Property Taxes Business Licenses Franchise Fees Building Permits Intergovernmental Revenues Fines and Penalties Brokers Tax Collections Other Revenues


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• $5.0M for 2015: • $1.4m in general government

• $2.3m in public safety

• $685k in public works

• $309k in capital outlay

• $307k in debt service

• $11k (0.2%) over budget • Public Safety $18k over budget mainly

due to capital outlay exceeding budget by $71k as a result of approvals to purchase vehicles via resolution. This was offset by utilities being $22k under budget and beach patrol being $31k under budget

GENERAL FUND

EXPENDITURES

General Fund Expenditures:

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2011 2012 2013 2014 2015

General Government

Public Safety

Public Works

Capital Outlay

Debt Service


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• $172k (3.6%) increase from 2014: • $134k increase in capital outlay due to

several vehicle purchases, various equipment purchases and other projects including changing room construction, some paving, etc.

• $69k increase in public safety primarily due to the allocation of utilities and general insurance

• $44k increase in general government primarily due to increased salaries related a hiring late in the prior year

• $90k decrease in debt service due to timing of debt service payments in the prior year

• Transfers in increased $195k due to the change in distribution of local accommodations taxes

• Transfers out decreased $1.0M due to no transfer to the Beach Preservation Fund as in the prior year to fund renourishment

GENERAL FUND

EXPENDITURES

General Fund Expenditures:

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2011 2012 2013 2014 2015

General Government

Public Safety

Public Works

Capital Outlay

Debt Service


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Enterprise Funds

• Water Fund net position increased $228k as a result of current year operations compared to an increase in net position of $139k in the prior year: • Total Water Fund revenues increased by approximately $152k or

13% primarily due to a 6% increase in consumption, a 1% increase in customers and a 2% increase in rates.

• Water operating expenses increased $65k or 6.5% primarily due to a $50k increase in non-capitalizable capital outlay related to replacement of various existing water pipes.

• Water Fund opening equity decreased $214k due to the implementation of GASB #68 and GASB #71 discussed later.

• The Water Fund has a net cash position of approximately 386 days. The bond world likes to see a minimum of 100 days in net cash position.


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Enterprise Funds

• Sewer Fund net position increased $107k as a result of current year operations compared to a decrease in net position of $28k in the prior year: • Total Sewer Fund revenues increased approximately $40k or 5.7%

from the prior year primarily due to an increase in consumption. • Sewer operating expenses decreased $95k or 12.9% primarily due

to a $38k decrease non-capitalizable capital outlay related to expenses in the prior year and a $19k decrease in sewer treatment charges.

• Sewer Fund opening equity decreased $166k due to the implementation of GASB #68 and GASB #71 discussed later.

• The Sewer Fund has a net cash position of approximately 230 days. The bond world likes to see a minimum of 100 days in net cash position.


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State Accommodations Tax Fund

• The State Accommodations Tax fund had an increase in fund balance of $40k in the current year compared to a decrease of $7k prior year. • Revenues of $389k increased $40k or 11.4% due to continued

growth in the tourism on the island.

• Expenditures/transfers out decreased approximately $7k to $349k due to decreased revenues in the prior year. The State Accommodations Tax Fund disburses the revenues collected annually in the subsequent fiscal year when the advisory board recommends awarding of the state accommodations tax funds.


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Local Accommodations Tax Fund

• The Local Accommodations Tax fund had a $0 fund balance in the current year as in prior years due to all revenues being transferred to other funds based on City ordinances: • Revenues of $709k increased $253k or 55.6% due to continued

growth in the tourism industry on the island as well as the additional 1% beach preservation fee that was approved by voters and implemented in February 2015

• Transfers out increased approximately $253k or 55.6% to $709k in direct correlation to the revenues as the revenues are transferred to other City funds annually based on City ordinance, as follows:

• $60k to General Fund for debt service

• $195k to General Fund for public safety

• Remainder to Beach Preservation Fund ($454k in FY15)


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Local Hospitality Tax Fund

• The Local Hospitality Tax fund had a $0 fund balance in the current year as in prior years due to all revenues being transferred to the City’s other funds based on City ordinances : • Revenues of $589k increased $71k or 13.8%, primarily due to

increased food and beverage sales on the island supported by the additional tourism and economic growth.

• Transfers out increased approximately $71k or 13.8% to $589k in direct correlation to the revenues as the revenues are transferred to the City’s other funds annually based on City ordinance, as follows:

• $40k to General Fund for operations

• $150k to General Fund for public safety

• Remainder to Beach Preservation Fund ($399k in FY15)


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Beach Preservation Fund • The Beach Preservation fund had an increase in fund

balance of $899k in the current year compared to a $1.9M decrease in the prior year: • Revenues of $228k decreased $1.1m or 82.2% due to the City

receiving a $1.0M state grant related to the beach renourishment project in the prior year.

• Expenditures decreased approximately $4.6M or 94.2% due to the $4.8M paid to the Army Corps of Engineers for the City’s local match portion of the beach renourishment project in the prior year partially offset by $282k in current year expenditures related to monitoring and preservation of the beach.

• Transfers in decreased approximately $808k primarily due to a $1.0M transfer from the General Fund in the prior year to fund a portion of the local match related to the beach renourishment project partially offset by the increased transfers from the local accommodations and hospitality tax funds in the current year.


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Tourism Fund

• The Tourism fund had a net increase in fund balance of $88k compared to an increase of $16k in the prior year: • Revenues of $180k increased $18k or 11.4% due to continued

growth in the tourism on the island.

• Expenditures decreased approximately $64k, or 41.3%, to $91k due to staffing changes resulting in various changes to how the funds were being spent. The City did not renew several magazine advertisements, their radio station giveaway was cancelled, TV contracts were not renewed due to increased rates, ads during major sporting events and with the Charleston City Paper were not renewed, and the City did not fund website maintenance as in prior years.


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AUDITING/ACCOUNTING UPDATE:

• Future Significant Changes in Accounting Principles:

• GASB #72 Fair Value Measurement and Application will require additional disclosure regarding investments

• GASB #77 Tax Abatement Disclosures will require additional disclosure regarding any abated taxes


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Other Items of Note: • Implementation of GASB #68 : Accounting and Financing

Reporting for Pensions – an amendment of GASB Statement No. 27 and GASB #71: Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 required adjustments to opening balances of $3.8M for governmental activities, $214k for the Water Fund and $166k for the Sewer Fund.

• Total capital assets, net of accumulated depreciation were $7.7 million at 6/30/15 – a decrease of $247k from 6/30/14:

• Additions of $206k related to vehicle and equipment purchases

• Depreciation expense of $453k: $362k for Governmental Activities, $51k for Water and $40k for Sewer

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Other Items of Note: • Contract commitments to Charleston Water System for

water purchases and James Island Public Service District for sewer treatment

• Subsequent Events: • Millage increase from 32.4 mills to 35.0 mills

• Approved the use of $174k in unrestricted net position of the Water Fund for the installation of automated meter readers for quarterly customers.

• Vibracore sampling contract in the amount of $68k from Beach Preservation G

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Other Items of Note: • Total long-term obligations outstanding at 6/30/15 were

$1.5M – decrease of $307k from 6/30/14: • $1.2M in Governmental Activities

• $548k in General Obligation Bonds • $569k in Lease Purchases • $96k in compensated absences

• $237k in Business-Type Activities • $228k in Water Revenue Bonds • $9k in compensated absences

• Total debt service payments for 2016 on outstanding debt is expected to be $250k: • $184k in the General Fund including $159k in principal and $26k in

interest; principal and interest payments on GO Bond were paid in June 2015

• $66k in the Water Fund including $57k in principal and $9k in interest • Unused legal debt margin is $4.9 million

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Compliance • No findings, significant deficiencies, or material

weaknesses were noted

• No Single Audit was required for fiscal year 2015 as the federal expenditures were less than $500k

Management Letter • Required communications to management and those

charged with governance: • Capital Improvement Plans for the Utilities

• Segregation of Duties

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Summary

• Unmodified opinion on the Financial Statements from GF&H

• Good financial condition as of June 30, 2015

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city of folly beach as · pdf filecity of folly beach ... •total sewer fund revenues...

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