Officials: 2017 on track so far, audit of 2016 shows ‘very comfortable’ reserves

Auditor, finance director report on township’s money

MONTGOMERY TWP. >> After the first quarter of 2017, Montgomery Township’s budget looks almost as good as it did last year, and the audit from 2016 shows a township with plenty of money in the bank.

Finance Director Ami Tarburton recently gave an update on the township’s budget outlook so far this year, after auditor Ed Furman delivered a clean bill of health for last year.

“The general fund balance was just about $3 million. That’s about 21 percent of your general fund revenues, and bond rating agencies look for a balance of eight to ten percent,” Furman said. “You’ve got a very comfortable general fund balance at the end of 2016, and that’s even after transferring some significant dollars over to the capital reserve fund.”

Each year, Montgomery’s supervisors transfer surplus revenue from the year that is ending to be used on capital projects and purchases in the next year, and Furman noted that transfer in giving the supervisors a rundown of the draft audit results so far.

“You really had no major capital additions in the year, so the depreciation expense outran the additions,” Furman said.

For the general fund, “notes and bonds payable went to zero, and you have a (pension) liability going up about $150,000 a year, which for this size township is not an unusual amount — it’s definitely manageable,” he said.

Total township general fund liabilities add up to roughly $5

million, with total net assets valued at $129 million, which Furman called a “tremendously strong” balance sheet.

In 2016, the separate fund for the township’s community and recreation center showed a deficit of roughly $560,000 for the year, and roughly two-thirds of that amount was for depreciation expenses, Furman said. Roughly $11.3 million has already been spent on the center, and the amount of bonds payable remaining

for that project is roughly $8.7 million, he said.

The township’s capital assets increased by roughly $700,000 last year, but was offset by nearly $1 million in depreciation, and the community center bonds are the only long term outstanding debt the township had at the end of 2016.

Total police pension obligations are estimated at roughly $19.1 million, Furman said, and roughly $16.1 million has already been budgeted toward those expenses.

“The funding level at the end of 2016 is about 85 percent. That’s an improvement over the prior

year, and the state is looking for a solvent plan to be about 70 percent of funding, so you’re well in excess of that,” Furman said.

The roughly 100-page audit document was compiled by downloading the township’s entire ledger for 2016, analyzing transactions for irregularities or suspiciously frequent occurrences, and cross-checking expenses against addresses for employees. Furman said his firm will issue in the coming weeks a formal opinion that no problems were found, but wanted to give the board an early picture of how the numbers looked, and how cooperative staff were in the process.

“The audit itself was done very smoothly. We got the field work done very quickly,” he said.

The supervisors voted unanimously to accept the preliminary 2016 audit results, and details are included in the board’s meeting materials packet for April 24. The board also heard an update from Tarburton on how the 2017 budget looks so far.

“Although the results are below 2016, they are in line with the general fund numbers,” Tarburton said.

As of March 31, the township’s general fund balance stood at $4.9 million, a decrease of 8 percent from the 2016 level of $5.3 million, and a number Tarburton said was largely due to slightly lower revenues this year than last.

“2017 revenues are eight percent below the prior year, but just two percent below the expected budget performance, and we fully expect these revenues to rebound before the end of the second quarter,” Tarburton said.

Earned income tax revenue spiked slightly in 2016 thanks to a large one-time earned income tax collection that will not be repeated, Tarburton said and the real estate transfer tax similarly spiked because of two large commercial property sales in the first quarter of last year.

Overall expenses are running $41,000, or 1.8 percent, over 2016 levels, and Tarburton said that slight increase is largely a result of normal salary, wage, and benefit increases and are in line with the budget projections for the year.

“In summary, the first quarter of 2017 is reporting (revenues) lower than the same period of 2016, but only slightly lower than the 2017 budget. We can attribute it mostly to timing differences, and we expect revenues to meet or exceed the 2017 budget,” she said.