Memo-11-14-2017-Item-14

November 14, 2017

MEMO TO:           Mayor Barber and Board of Commissioners

FROM:                  Frank A. Rush, Jr., Town Manager

SUBJECT:           Presentation – Annual Financial Reports - (Summary & Suggested Motions)

Town of Emerald Isle – June 30, 2017 Comprehensive Annual Financial Report

S. Preston Douglas & Associates (SPDA) CPAs has completed the Town’s June 30, 2017 financial audit, and a copy of the June 30, 2017 Comprehensive Annual Financial Report (CAFR) is attached for your review. 

Laura Rotchford, Finance Director, will brief the Board on the highlights of the financial statements and audit report at the November 14 meeting.  SPDA previously met via teleconference with the Board-appointed Audit Committee (Mayor Barber, Mayor Pro-Tem Messer, and Commissioner Wright) on October 30 to review the report. 

The Town received an unmodified (a “clean”) opinion from SPDA, and I am again pleased to report that the Town maintains a solid financial position.  Town staff and I are committed to maintain and improve that financial position in the future.  SPDA also did not identify any major concerns with our financial operations, and expressed their opinion that the Town’s assets are well-managed by our staff. 

I am also pleased to report that the Town was awarded the “Certificate of Achievement for Excellence in Financial Reporting” by the national Government Finance Officers Association for the 4th time for its June 30, 2016 CAFR.  In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report.  The report must satisfy both generally accepted accounting principles and applicable legal requirements. 

The attached memo from Laura Rotchford includes various highlights of the June 30, 2017 CAFR.  I do, however, want to point out a few of the most significant items that relate to the practical management of the Town’s finances:

  • the Town’s total General Fund balance at June 30, 2017 is $2,179,388, and this amount represents a $99,426 decrease from the June 30, 2016 fund balance amount due to the intentional early retirement of an outstanding Fire Engine debt prior to June 30 (final payment was $188,954); Town staff will be working to “replace” this fund balance during FY 17-18 if possible,
  • the Town’s General Fund balance (unassigned plus Stabilization by State Statute) has increased from approximately $1.5 million in 2001 to nearly $2.2 million in 2017, and has remained relatively stable in recent years, roughly between $2 million and $2.2 million; a historical graph of General Fund balance is attached,
  • the Future Beach Nourishment Fund has a total fund balance of $2,505,027 at June 30, 2017; these funds are reserved for future beach nourishment projects,
  • there is a total of $38,208 remaining in the Bicycle and Pedestrian Fund (derived from fundraising proceeds); the Board should recall that $15,000 of this amount is earmarked for the Old Ferry Road sidewalk project in 2018, and the remaining balance is available for future projects at the discretion of the Board and the Bicycle and Pedestrian Advisory Committee,
  • there is a total of $63,954 of committed General Fund balance reserved for Special Separation Allowance payments to sworn law enforcement officers, and this amount has remained constant in recent years; the Town currently has one employee eligible for this benefit (retired Chief Waters), and this expense was again charged to the General Fund budget in FY 16-17 rather than using reserved funds,
  • the Town’s total outstanding debt at June 30, 2017 was $2,150,823, and this amount decreased by $787,558 during the past fiscal year (from $2,938,381 at June 30, 2016), and
  • the Town’s tax collection percentage continues to be very high at 99.64%.

Emerald Isle EMS, Inc. – June 30, 2017 Financial Statements

As you know, the Town provides financial management services for Emerald Isle EMS, Inc. through a separate contract, and Laura Rotchford also oversees EI EMS, Inc. finances for the Town.  Williams, Scarborough, Smith, & Gray (WSSG) CPAs completed the audit of EI EMS, Inc. finances, and a copy of the EI EMS, Inc. financial statements is also attached.

As noted, total EI EMS, Inc. revenues were $595,898 for the fiscal year ended June 30, 2017.  Of this amount, $390,000 was provided by the Town’s General Fund, with the bulk of the remainder ($203,620) derived from service fees.  The Board should note that service fees greatly exceeded the budget estimate for FY 16-17 ($170,000) and also the FY 17-18 budget estimate ($180,000), and will hopefully provide some budget flexibility in the future.  Total EI EMS, Inc. expenditures were $565,938.  The Board should note that the attached financial statements do not include funds managed separately by EI EMS, Inc. in its “volunteer” account.

The total ending cash balance for EI EMS, Inc. as of June 30, 2016 is $88,356.  These funds are intentionally being reserved for the future replacement of an existing ambulance in FY 19-20 or FY 20-21.  The estimated cost of the new ambulance is expected to be $200,000 or more, and it may be necessary for the Town to supplement these funds at that time.

As you know, the Town is working to integrate Emerald Isle EMS into the Town government organization on or before March 1, 2018.  All EMS revenues and expenditures will be accounted for in the Town’s General Fund from that point forward, and a separate audit will no longer be necessary in the future.    

Finally, I want to also take this opportunity to publicly thank Laura Rotchford for her excellent work as Finance Director for the Town of Emerald Isle.  I greatly appreciate her hard work and attention to detail on the CAFR, which is a significant undertaking.

Laura Rotchford and I will be happy to answer any questions or address any concerns at the November 14 meeting.