Auditor: Abby needs to boost fund balance

By Kevin O’Brien

Abbotsford’s auditor says she would like to see the city replenish its general fund balance after several years of watching it drop.

“I would say that is the first priority,” said accountant Carrie Leonard of Johnson Block during a presentation of the city’s 2019 audit report at a council meeting on Aug. 19. “We really from a financial perspective, would like to see that unassigned fund balance built up to at least 15 percent of expense level.”

The city’s fund balance — money left in the general fund after all yearly expenses have been met — decreased by over $61,000 from 2018 to 2019, according to the report from the accounting firm. “Unassigned” refers to money that is not committed for a specific purpose.

City administrator Dan Grady noted that the council budgeted $100,000 in contingency for 2020, so as long as the city does not dip into those funds this year, the fund balance should bounce back into the acceptable range.

Mayor Lori Voss asked if the $61,000 drop in the fund balance could, in part, be due to money that was spent on projects one fiscal year and then reimbursed to city by grant money in the next year.

Leonard agreed with that assessment, saying “there is a timing difference.”

See AUDIT/ Page 16 When Ald. Mason Rachu asked if the city is “moving in the right direction” on rebuilding the fund balance, Leonard said “yes” based on what Grady and Voss were saying.

Still, Leonard urged council members to keep a close eye on how the city’s actual expenses compare to what is in the budget, and to make sure the revenue is available to cover them.

The city may also want to consider enacting a minimum fund balance policy, Leonard said, just to set a goal for how much money is available for unexpected expenses.

Leonard said her firm usually recommends a minimum fund balance of between 15 and 25 percent of the overall budget, which would have been $281,000 in 2019 for Abbotsford.

“That just gives you a little bit of an operating cushion so you don’t have to borrow from other funds for cash reasons or do any short-time borrowing,” she said.

Leonard also went over weaknesses in the city’s internal financial controls, such as having a small administrative staff, which makes it impossible to fully segregate the city’s accounting duties.

“These are very common findings with a lot of our municipalities,” she said. “Most of our municipalities have these exact findings, and most of them are pretty hard to get rid of.”

To help remedy this situation, the auditors recommend the city council “take an active part in monitoring” the city’s operations to make sure the finances are in order. Leonard said the only other alternative would be to hire additional staff, which would likely not be worth it.

DPW Craig Stuttgen asked Leonard a series of questions about why the city’s transportation aid from the state continues to go down, even though it should be going up because the city is spending more money on road projects.

“I can say with 99 percent certainty that we are not getting credit for what we are spending on roads,” he said.

The state’s transportation aid formula is based partly on the six-year average of each municipality’s street expenses, so if that number goes up over time, the city should get more money.

Stuttgen pointed out that the city has received a couple of grants in recent years to pay for $1 million projects, so expenses have definitely gone up. Leonard, however, said the grant money is not counted toward the city’s average.

Stuttgen said the city is still spending more on streets than it was in the past.

“How is my six-year average going down?” he asked.

“We don’t determine what the aid amount is; we just report the numbers,” Leonard responded.

Grady noted that the city’s transportation actually did go up the maximum of 15 percent allowed this year, but he also pointed out that aid amounts are limited by what the legislature and governor include the state’s two-year budget.

“If general transportation goes down in the budget, it doesn’t matter how much road work you’re doing, there’s less pie to go around to everyone,” he said.

In other audit news, Mayor Voss said the city is planning to apply for a small water rate increase this year, along with possibly another sewer rate hike.

Leonard said the Public Service Commission, which signs off on water rate increases, had been holding off on approving hikes until it was clear how COVID-19 was affecting the revenue coming into water utilities.

“Consumption is down, businesses are closed,” she said. “You might need a bigger rate increase to cover that, essentially.”

_ Grady told the council that attorney Alan Harvey recently sent him his updates to the city’s code of ordinances, but many of the changes he made were never actually approved by the council. For years, Harvey would send the city recommendations on updating its ordinances, but not all of them were adopted.

“He took every recommended update and just assumed the council passed it,” he said.

Grady asked if any council members were interested in reading through Harvey’s revisions and looking for provisions that seem “incorrect.” Councilors seemed reluctant to take on this task individually, and the issue was not on the agenda, so no action was taken.

_ Grady said a representative from Advanced Disposal will be at the Aug. 31 council meeting to discuss residents’ requests for smaller garbage and recycling carts. He also noted that Sept. 1 is the last day for curbside brush pick-ups, after which residents will need to bring their yard waste to the city pile on their own.

_ Stuttgen said the stretch of Hemlock Street south of Abbotsford Elementary was pulverized that day, Aug. 19, in preparation for a re-paving project.

_ The council approved an ordinance to annex a five-acre parcel of city-owned land just north of STH 29 and west of STH 13 from the town of Colby.

_ The council approved a change to the city’s zoning code that will allow property owner Jim Jakel to move a sign on property he owns along STH 13. The zoning change was needed to appease the Wisconsin of Department of Tranportation, and will make it easier for gas stations, restaurants and medical clinics to be built along STH 13.

_ The council approved a certified survey map for the property owner at 306 W. Elm St., who is in the process of buying land from his neighbor.

_ The council approved a $40,000 payment to the estate of Doris Schilling, who passed away at the end of last month. When Schilling decided in 2018 to sell land to the city for a new residential subdivision, she agreed to accept $120,000 over the course of three years. In the event of her death, any remaining payments were to be made right away to the Schilling Sibling Trust.

In a related matter, the council voted to spend roughly $1,250 on 50 lilac plants to provide a natural boundary between Kent Schilling’s property and a new park in the subdivision.

_ The council approved a mortgage satisfaction for Sherri Leu, who borrowed money from the city’s previous revolving loan fund in 2005 to pay for the Corral Bar. The loan has since been paid off, but the city needed to confirm that in writing.

_ The council accepted a quote from Rack Industries to replace the city hall computer used by administrative assistant Erin Clausnitzer. The total cost is $1,109 for the desktop computer and installation.

_ The council approved a street-use permit for the block of North First Street in front of Fat Boys Bar and Grill (formerly the Corral), which is planning to host an Alzheimer’s benefit with a live band on Aug. 29.

The permit was approved on the condition that the outdoor activity ends at midnight and clean-up is completed by 6 a.m. Even though the bar owners did not apply for a permit to allow alcohol to be consumed outside, the council authorized it as long as only beer and wine are consumed inside a 400-square-feet fenced-in area outside the bar.

Ald. Mason Rachu voted against the motion to approve the permit.

_ The council reviewed and approved $365,068 in monthly bills.

_ Ald. Dennis Kramer, who participated in the meeting by phone, asked if other council members were willing to wear masks at meetings to set an example in the fight against COVID-19.

“Negatory on that one,” responded Ald. Jim Weix, who was one of several council members and other city officials not wearing a mask at last week’s meeting.

When Kramer pointed out that Gov. Evers has issued an order requiring face coverings indoors, Weix was adamant that he’s free not to wear one.

“When it becomes a law in the Constitution of the United States of America, I will reconsider,” he said. “Until then, you can forget it.”