Huntington Woods Aces Annual Audit

Huntington Woods received the equivalent of a grade A on its annual audit, according to auditors from accounting firm Plante & Moran who presented their findings Tuesday night at the , but economic challenges remain.

The auditors confirmed a general fund increase of $339,339 in the 2010-2011 fiscal year for a balance of slightly more than $6.4 million – the fourth consecutive year the city's fund equity has improved – and gave Huntington Woods an unqualified opinion in their report, which is the highest level of assurance a city can receive.

"Fiscally, to me, it's one of the best-run cities we work with. As a citizen, that would make me feel good," Plante & Moran audit partner Leslie Pulver said. "You're not saying 'let's close this and let's close that.' You have a lot of nice things and you're able to fund that."

However, the audit and the city's Comprehensive Annual Financial Report for the 2010-2011 fiscal year noted that Huntington Woods took a number of steps to achieve that level of stability, including:

• Maintaining a AA+ bond rating.
• Performing long-term budgeting and cost cutting.
• Reducing staffing.
• Freezing or reducing employee wages.
• Eliminating most tree removals.
• Slashing overtime for patching, fall maintenance and other services.
• Eliminating snow removal on weekends, except during emergencies.
• Eliminating sidewalk snow removal on overtime or weekends.
• Reducing equipment rental costs.
• Accelerating pension funding.

Pulver noted that Huntington Woods contributed $345,602 toward its pension obligations, which was in addition to the $345,606 in pension assets the city had at the beginning of the year, according to its annual report.

City Manager Alex Allie said the contribution was designed to move Huntington Woods toward its goal of funding its Michigan Municipal Employees' Retirement System obligations at 80 percent by 2020.

Despite the good news, factors beyond the city's control continued to pose challenges, according to the audit and annual financial report.

• Taxable value: The city's taxable value declined by 6 percent in 2010-2011 and is expected to decrease again in 2011-2012, according to the audit. "The City lost 9.91% of its taxable value in the last two assessment cycles," the city's financial report notes. "This is equal to $32,277,969 of assessed value. This drop is equal to $685,025 in revenue lost on a yearly basis upon the current levy of 21.2227 mills."
• State-shared revenue: The audit predicts that "2011 will see an additional 1/3 reduction in statutory revenue sharing," which, according to the annual financial report, constitutes 6.8 percent of revenues in the general fund. That figure was 26.8 percent in 1999, the report says.
• Other income: "Building permits, interest income and all revenue, it seems other than cable fees have dropped off the charts," reads the audit. The city's annual financial report also noted the impact on Huntington Woods' investments of short-term Treasury rates near zero. "This fiscal year the City earned $127,341 in interest earnings as compared to $233,275 for the period ended June 30, 2010," the report reads.

Pulver and Plante & Moran senior associate Kristin Hunt concluded in the audit that "as a result, the City's anticipated revenue for 2012 is approximately equal to what it was three years ago."

The auditors also made a couple minor recommendations, which include:

• Institution of a formal credit card policy: Huntington Woods Finance Director Tony Lehmann responded that he already has drafted a policy that will be on the City Commission's agenda Jan. 17. At the request of Commissioner Mary White, Pulver agreed to send the city a sample policy for comparison's sake.
• Implementation of a gas and oil inventory: "The city maintains an inventory of gas and oil to be used for City vehicles," the audit reads. "The value of the inventory is adjusted based on purchases and reported usage. The balance has been steadily increasing over the last four years. We recommend the City perform a physical evaluation of the inventory and adjust the book balance, if necessary." Pulver said the increasing balance could be due to a variety of factors such as fuel evaporating, seepage, lax bookkeeping or someone taking the fuel without accounting for it. Lehmann agreed that the city needs to institute an annual inventory audit to identify and resolve the discrepancy.

But, on the whole, Pulver was positive about the city's accounting.

"If it were school, it would be like getting an A on your report card," he said of Huntington Woods' audit.

City Manager Allie also expressed optimism about the Huntington Woods' overall financial outlook, saying he believes this is the city's "bottom-out year" and that an upward climb is beginning.

"We should really recognize our city manager and Tony our finance director and (Deputy Finance Director/Treasurer) Riki (Scott-Heroux) and all our staff at City Hall," Commissioner Mary White said later Tuesday night during a regular commission meeting at . "For hard times, for a city to come out with this type of budget, hats off."

The 2010-2011 audit will be posted on Huntington Woods' website within approximately one week for residents who would like to learn more.