ENID, Okla. —
Revenue is up, expenses are down, and cash in the bank is on the rise.
That was the news city of Enid Chief Financial Officer Jerald Gilbert presented to the Enid City Commission Tuesday night.
Gilbert reviewed an independent auditor’s report of the city’s financial statements for the fiscal year ending June 30, 2012.
The report, prepared by Ronald Cottrell, CPA, showed the city continued a trend in 2012 of increasing its revenues and operating “in the black.”
“There’s a lot of good news in this audit,” Gilbert told commissioners.
According to the audit report:
• The city’s total net assets topped $191 million in 2012, up $15.7 million from the previous year.
• City cash funds combined were more than $33.6 million, up almost $2.4 million over 2011.
• City revenue in 2012 was $78.2 million, up almost 11 percent over 2011 revenue of $70.6 million.
• City expenditures in 2012 were $62.4 million, down 6 percent from 2011 expenditures of $66.3 million.
The city’s capital assets increased by almost 17 percent in 2012, from $172 million in 2011 to $201 million in 2012.
The bulk of the $28.8 million in new capital asset acquisition included:
• City street construction.
• Renaissance project construction.
• Enid trails system improvements.
• Continued work on the city’s wastewater reclamation facility;.
• City administration building roofing.
• Irrigation system upgrades at Meadowlake Golf Course.
• Improvements to downtown box culverts.
Of the city’s $33.6 million in available governmental funds at the end of FY2012, about $16.15 million is “available for spending at the government’s discretion.”
The city’s general fund finished the last fiscal year with an unassigned cash balance of $6.9 million, representing 17 percent of the year’s total in general fund expenditures. Cottrell told commissioners that percentage is a key indicator of the city’s fiscal health.
“One of the keys for most municipalities is the percentage of your unassigned general funds compared to total general fund expenditures,” Cottrell said. “A comfortable range for a city your size would 8 to 10 percent.”
He said Enid’s 17 percent relationship between general fund cash and expenditures puts the city “in good shape.”
Another key indicator is the ratio of the city’s current assets to its current liabilities.
Cottrell said the city has about $73 million in current assets, or assets that could easily be liquidated, and about $21 million in current liabilities.
That puts the city’s assets-to-liabilities ratio at 3.47.
Cottrell said a 2:1 ratio would be a healthy ratio, and the city’s current assets-to-liabilities ratio of 3.47 is “really good.”
Cottrell said he didn’t see anything in the financial statements that should cause commissioners concern.
“The overall cash balances ... are good,” Cottrell said. “You have the money you need to do the things you need to do.”
The city finished the last fiscal year with $61.2 million in cash and investments, including $28 million in unrestricted money and $33 million in restricted funds.
Gilbert told commissioners the city’s cash balances are healthy, and the city needs to stay the course in its fiscal management.
“I think it’s a healthy total, and as we look forward we will need to continue to manage our projects as we have to get to this position,” Gilbert said.
He cautioned the commission against using the cash balances as a “piggy bank.”
“There’s needs of the city that need to be filled, and the bigger that pot gets the more people want to spend it,” he said. “You need to continue to invest in infrastructure as you’ve done.”
Investing in infrastructure does come at a cost.
The city’s long-term debt increased by almost $9.4 million in 2012, raising the total long-term debt to almost $80.4 million. According to the audit report, the “key factor in this increase was additional wastewater debt added as the new wastewater reclamation facility nears completion.”
In an interview before the commission meeting, Enid City Manager Eric Benson said the cost of the treatment plant is covered by pledged future utility revenues and will not raise any taxes on Enid residents.
Benson said the plant also will operate at a lower cost than the old facility, because it is automated and requires a staff of four, instead of the current manning requirement of 25 people.
Benson said no personnel will be forced out of employment with the new plant, but retiring staff and other attrition will be “replaced with technology capabilities, managed by other people.”
Benson said he was “very satisfied” with the audit report, adding it was what he expected.
“Anytime you have an increase in revenue and a decrease in expenses, it’s grounds for celebration,” Benson said.
But, Enid’s budget surplus in 2012 isn’t a one-year anomaly.
According to audit report data provided by the city’s finance office, Enid has operated “in the black,” with revenues exceeding expenses, every year for the last 10 years.
And, revenue growth has outpaced rising expenses, leading to a surplus margin that has grown over the last 10 years.
In 2003, the city brought in $49.4 million in revenue and spent $38.9 million for a surplus of $10.5 million. The 2012 audit, including $78.2 million in revenue and $62.4 million in expenses, showed a net a surplus of $15.8 million.
The city’s net assets also have shown strong growth, corresponding to the city’s increased revenues.
Net assets have increased almost 91 percent since 2005, from $100.2 million to the current level of $191 million.
Benson attributed the city’s fiscal performance to a long-term shift in fiscal philosophy.
“We focused, and have for the last seven years, on the revenue side of city management,” Benson said. “We didn’t do that in the past. We focused on cutting costs, and we didn’t look for ways to increase revenue.”
He said the city now is enjoying the benefits of investments in infrastructure, and in efforts to increase Enid’s regional draw for retail shopping.
“Because of the investments in making Enid a destination, and the retail developments, people outside of Enid are taking notice of us, and the numbers speak for themselves,” Benson said.
Aside from budgetary measures, Benson attributed the city’s fiscal health to an ongoing commitment by city employees to cut costs and increase efficiency.
Benson said city employees have cut workers’ compensation claims by $800,000 per year by operating more safely and more efficiently.
Enid is well-positioned to grow through the current oil and gas boom and beyond, Benson said.
“The best thing we did was poise ourselves for the economic good fortunes of this economy,” Benson said. “We have embraced our opportunities to attract more traffic to Enid.”
Benson said many people are quick to attribute the city’s good fortunes solely to the boom in the oil and gas industry, but the city’s revenue increases “started two years before the oil boom was even announced.”
“We’ve been aggressive in grasping the opportunities for growth and economic viability,” Benson said.
He said that with the exception of the proposed parks plan, Enid has made the bulk of its major capital investments for the foreseeable future.
“All of our big purchases have been made, and we now are in a position to reap the benefits of those investments,” he said.
He said the proposed bond issue for the parks plan would represent a “a net effect of no change” on the city’s financial liabilities, “because it’s a continuation of the existing seven mil (ad valorem) tax.”
Cottrell summed up the city’s need for capital investment last night with one sentence: “Sometimes you have to spend money to make money.”
ENID, Okla. —
Revenue is up, expenses are down, and cash in the bank is on the rise.
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