In August of 2012, the State Auditor completed its accountability audit for FY’s (Fiscal Year) 2010 and 2011 and a financial audit for FY 2011 for the City of Chewelah. At the conclusion of these audits the City was given three findings. The first was regarding cost allocations for employees. Steps had already been taken to resolve this issue that had been brought to the attention of the previous administration. Detailed timesheets for public works employees had been filled out for the previous six months in preparation for the proper allocation of funds for FY 2013. The reason for these timesheets is to make sure that the correct funds are being charged for the employee’s wages. Work being done for the water department cannot be charged to the general fund, and general fund work (police, library, parks, ect.) cannot be charged to the electric fund. The state auditor has also explained to us exactly what they expect the City to provide them showing how the administrative wages are documented. The allocations were not shown to be inappropriate, simply not documented properly. This documentation and procedure is complete and ready for the next audit.
The second finding was: “The City transferred restricted funds from the Revitalization Fund to the General Fund. The 2011 transfer brought the ending fund balance to zero.” The Revitalization Fund was established around 2003 in order to facilitate accounting for the receipt and disbursement of funds relating to the re-construction of Segments A and C of the downtown area, including grant AND City funds.
During the infant years of the Revitalization Fund, monies were transferred from the General Fund to the Revitalization Fund to accommodate the disbursement of application fees for grant funding and to provide a source of matching funds for grants received. The transfers from the Revitalization Fund to the General Fund of $42,000 in 2010 and $33,487 in 2011 comprise the balance of these unexpended general funds – general funds because all grant funds received had been expended. This can be substantiated as all grant documentation has been retained. Grant funding for eligible disbursements were always requested and receipted after those disbursements and for those disbursed amounts.
The third finding was: “The City transferred Electric Fund surplus to the General Fund. It based the amount of the transfer on budgeted amounts and did not determine the actual surplus or adjust for future utility maintenance or improvements.” The City has transferred electric funds into the general fund for well over fifteen years. It was a previous auditor in 2004 that provided the City with the RCW that has been used to justify the transfer. The amount of this transfer has fluctuated, but steadily increased to the amount of $250,000. It is now the auditors ruling that this transfer will no longer be allowed. After checking with a number of other municipalities and Municipal Research and Services Center (MRSC) the City has learned that no one else makes these inappropriate transfers and it needs to comply with the auditor’s finding.
Making up for a $250,000 loss in the general fund WILL mean a cut in services. It is the Cities intention that the customer will not have to pay extra in their monthly bill to balance the 2013 budget. The City of Chewelah is not the only city facing these types of financial difficulties. Cities across Washington are being forced to make cuts in service in order to balance their budgets. However, Chewelah will be forced to cut its general fund budget by approximately 17 percent. General fund services include library, law enforcement, parks/ cemetery, street, pool, museum, and administration. Cuts will be made and prioritized by whether or not the services are public health or safety related. These are our primary obligations and our highest concerns. If a service is not public health or safety related it will be cut first. The overall effect on general fund will also be taken into consideration. For instance, if the service only cost the general fund $2,000 and it is an important service to the community, it will take a back seat to other services that cost the general fund a greater amount. Monthly cost to the citizens of Chewelah will be a constant consideration and at the forefront of our decision making process. Even though we are looking at cuts to some services, our preliminary plans for budget cuts will hopefully lead to the average monthly bill being less than what it has been.
Decisions have not yet been made determining which cuts will be instituted first. These determinations will occur during the budget process which will begin the middle of September and be completed before the end of the year.
Article Submitted by Mike Frizzell, Chewelah City Administrator