(Oct. 20, 2016) Partner Mike Kleger and Manager Leslie Michalik of Pigg, Krahl and Stern accountants delivered Pocomoke’s financial statements and audit report for fiscal 2016, which ended June 30, and noted a deficit in net position of $639,000 from last year.
Net position is the term, adopted in 2011, that replaces net assets. The shorthand in describing the term is if 100 widgets were purchased for one dollar each, but are now trading for $9, the net position is worth $900, or the total current value minus the cost of the initial investment.
“The City’s combined net position, after depreciation, at June 30, 2016 was $10,705,000. Of this total, $13,400,000 is invested in capital assets or restricted for special revenue leaving an unrestricted deficit in net position of $2,696,000,” the report reads.
Meaning, the town’s liabilities outweigh its assets by almost $2.7 million.
The auditors recommended eliminating the “special revenue” fund in a separate report, also delivered during Monday’s regular council meeting, advising that in 2016, only funds from Community Development Block Grants were tracked there. Previously, the fund was used to account for CDBG revolving loans and Section 8 programs.
Revenues increased slightly between 2015 and 2016 according to the report — by about $28,000 and expenses grew at a slower rate year over year during fiscal 2015 and 2016.
In fiscal 2015, the total deficiency in net position, encompassing both governmental and business-type activities is about $374,000. In 2016, the number grew to about $639,000, a difference of about $293,000 between the years.
On the governmental side of the equation, the town was set to realize a deficit of $154,000, but transferred $242,000 to the water/sewer fund to offset a nearly $500,000 loss on the business activity side.
The losses on the government side are explained in the report by increased expenses in general government, public safety and urban development/housing. In addition, the PCPD is adding a 17th officer this month, in addition to promoting several officers and issuing a blanket raise to all PCPD officers, the report states. Another expense related to police is the recent switch to the State Law Enforcement Officers Pension System, which has a cost of $55,000 — but that is expected to be offset by a reduction in overtime.
On the business side, Pocomoke City’s position slid another $243,000 due to increases in salaries and wages; materials and supplies; and utilities.
Finally, as of June 2016 the city’s fund balance was about $170,000 according to the report, which is a decrease from $229,000 last year. Kleger said neither number was particularly healthy and suggested the town attempt to build the balance up to about $750,000.
Net position is the term, adopted in 2011, that replaces net assets. The shorthand in describing the term is if 100 widgets were purchased for one dollar each, but are now trading for $9, the net position is worth $900, or the total current value minus the cost of the initial investment.
“The City’s combined net position, after depreciation, at June 30, 2016 was $10,705,000. Of this total, $13,400,000 is invested in capital assets or restricted for special revenue leaving an unrestricted deficit in net position of $2,696,000,” the report reads.
Meaning, the town’s liabilities outweigh its assets by almost $2.7 million.
The auditors recommended eliminating the “special revenue” fund in a separate report, also delivered during Monday’s regular council meeting, advising that in 2016, only funds from Community Development Block Grants were tracked there. Previously, the fund was used to account for CDBG revolving loans and Section 8 programs.
Revenues increased slightly between 2015 and 2016 according to the report — by about $28,000 and expenses grew at a slower rate year over year during fiscal 2015 and 2016.
In fiscal 2015, the total deficiency in net position, encompassing both governmental and business-type activities is about $374,000. In 2016, the number grew to about $639,000, a difference of about $293,000 between the years.
On the governmental side of the equation, the town was set to realize a deficit of $154,000, but transferred $242,000 to the water/sewer fund to offset a nearly $500,000 loss on the business activity side.
The losses on the government side are explained in the report by increased expenses in general government, public safety and urban development/housing. In addition, the PCPD is adding a 17th officer this month, in addition to promoting several officers and issuing a blanket raise to all PCPD officers, the report states. Another expense related to police is the recent switch to the State Law Enforcement Officers Pension System, which has a cost of $55,000 — but that is expected to be offset by a reduction in overtime.
On the business side, Pocomoke City’s position slid another $243,000 due to increases in salaries and wages; materials and supplies; and utilities.
Finally, as of June 2016 the city’s fund balance was about $170,000 according to the report, which is a decrease from $229,000 last year. Kleger said neither number was particularly healthy and suggested the town attempt to build the balance up to about $750,000.