CLAREMONT — The City of Claremont received a “clean” audit for last fiscal year and ended fiscal year 2020 with a small surplus despite late impacts from the ongoing novel coronavirus pandemic.
An independent audit of last fiscal year gave Claremont’s financial operations an unmodified (“clean”) report, meaning the auditors found the city in compliance with all federal and state accounting regulations and did not report any issues requiring correction.
This marks the city’s thirteenth consecutive year of receiving a clean audit report, an achievement that dates back to 2007, according to City Assistant Finance Director Lisa Richmond.
“We work really hard to make sure it’s done right,” Richmond said.
Audits primarily serve as financial records to private investors and public or nonprofit grant programs, Richmond explained. Maintaining consistently clean records is particularly critical to a municipality like Claremont that relies heavily on federal grants.
“Having clean audits helps move you up the list for consideration for funding,” Richmond said.
Achieving Claremont’s consistency in clean audits requires a team approach and a lot of oversight, including internal audits of city departments.
The audits over the past 13 years include state and federal audits, the latter of which are considerably more rigorous, Richmond noted. Additionally there have been at least three independent auditing firms contracted during this time.
“This is not just us being chummy with one firm,” Richmond said. “We have had three. And they each go into their initial audits looking for anything they can find.”
Vachon Clukay & Company, a Manchester based auditing firm, completed the city’s fiscal year 2020 audit. The final report was released last week.
According to the audit Claremont ended last fiscal year with a net surplus of $570,000, which brings the city’s unassigned fund balance to $2.39 million.
Overall Claremont’s actual expenditures in fiscal 2020 were $890,000 less than the city budgeted, explained Tammy Webb, an accountant from Vachon Clukay & Company.
Most of these savings were a result of the last fiscal quarter when the novel coronavirus pandemic forced citywide department closures and suspension of many services. Part time and many full time employees were furloughed and the city saved additionally on utility costs from unopened buildings.
Furloughed employees were eligible to receive the federal unemployment bonus through the CARES Act and still maintained their health insurance policy through the city, Morris said.
The city also received $274,000 more in vehicle registration fees than projected last fiscal year.
The city also encountered a few revenue shortfalls, Webb noted. Revenue from the Claremont Community Center was $157,000 less than budgeted due to the center’s closure during the pandemic from March through most of June. Additionally projected tax income from deeded or auctioned properties was $385,000 less than projected in the budget.
The year-end unassigned fund balance of $2.39 million equates to 13% of the city’s general operating cost. The city fund balance policy strives to maintain a balance between 5% to 15% of its operating expenditures.
Morris said that $530,000 of the unassigned fund balance will be used to offset costs in fiscal year 2022. Morris is proposing a municipal budget of $11,586,641 to be raised by taxes. The proposal level funds the city tax rate at $15.17 per $1,000 of assessed property.
In the long term Morris said he would like to shift from relying on the unassigned fund balance to stabilize the tax rate, as budget surpluses are not annually guaranteed. Claremont budgets have drawn from the unassigned fund balance the past three years.
However, the next budget cycle is expected to be tight, according to Morris. The city is anticipating an increase of over $237,000 in employee retirement obligations and a loss of $212,000 the state is proposing The city is anticipating a significant downshifting of costs in the 2022 state budget, including an increase of over $237,000 in Claremont’s employee retirement obligation and the loss of over $212,000 in state aid to the city’s sewer fund, based on the proposed state budget.
Morris said he ideally aims to build the fund balance level to 15% of the city’s operating system cpenses, to strengthen the city’s position to acquire favorable interest rates.