The City of Clinton is in strong financial shape, according to a recently-conducted audit showing that the city’s fund balance is not just strong, but trending well above peer groups and the statewide average.
Julie Harrison of Denning, Herring, Sessoms & Company PA presented the annual audit for 2014-15. She praised City manager Shawn Purvis, Finance officer Kristin Stafford and other city staff members for their assistance before detailing the highlights of the annual audit.
“We’re here to provide assurance that the financial statements are fairly presented,” said Harrison. “We don’t tell you that you had a great year, we don’t tell you that you had a bad year. We tell you that your financials tell the story of your year. We’re here to tell you that they are fairly presented.”
She said her firm issued an unmodified opinion, “the highest form of assurance we can give you — a clean opinion.”
“That is good news,” she noted.
Among the numbers, she stated that the unrestricted General Fund balance stood at 74.6 percent. In the prior year, it was 74.5 percent, so the number had been maintained. Restricted fund balance is primarily made up of the amount that is required by state statute to be held as a stabilization amount, with the remaining 6.5 percent consisting of funds used in the cemetery and non-spendable amounts such as inventory.
Allocated in 2015-16 budget was $146,900, or 3.5 percent of the unrestricted fund balance, including amounts to match a Parks and Recreation Trust Fund grant and for renovations to Newkirk and Royal Lane parks.
The N.C. Local Government Commission recommends that local governments maintain a minimum unassigned fund balance of no less than 8 percent of expenditures. The City of Clinton has adopted a formal fund balance policy establishing a goal of maintaining a fund balance for the General Fund between 35-40 percent of expenditures.
Any funds in excess of 40 percent may be assigned for capital purchases.
Once General Fund balance reaches 40 percent of expenditures in any given year, the remaining will be credited to the capital reserve.
“That has actually increased this year to $594,000, or 14.1 percent of your unrestricted fund balance — about a 3 percent increase,” Harrison noted. “That’s a good thing.”
Harrison said that a look into how Clinton stacks up with its peer groups showed a positive outlook.
“You’re at the top of the list at 51.8 percent, your fund balance as a percentage of expenditures,” she remarked. “Your peers are well below that — 28.54 percent, 32 percent, even statewide it is 43 percent.
“Your fund balance is very healthy for the size of the town,” she continued. “Basically, you can cover around six months of expenditures if you had absolutely no revenues whatsoever. That’s very good, very healthy.”
Reach Managing Editor Chris Berendt at 910-249-4616. Follow the paper on twitter @SampsonInd and like us on Facebook.