BERLIN – Most of the town’s enterprise funds still need improvement, according to a presentation of the fiscal year 2021 audit.
Representatives of PKS & Company presented the latest municipal audit at this week’s Berlin Town Council meeting. Michael Kleger of PKS confirmed that the town’s enterprise funds still struggled to break even.
“I think you’re making progress, but I think there’s still a ways to go to kind of get where you need to be,” he said.
Kleger and Leslie Michalik, also of PKS, presented elected officials with an overview of the fiscal year 2021 audit. Kleger said the town’s financial statements presented fairly.
“This is also known and often referred to as a clean opinion and is the highest level of assurance we can give as outside auditors,” he said.
Michalik said the general fund’s revenues exceeded expenditures by roughly $1.8 million. The town ended the year with a fund balance of $6,293,200. Though some of that is nonspendable and restricted, the portion that could potentially be spent—the assigned and unassigned categories—totaled more than $3.8 million. That represents eight months of operating expenditures for the town.
“The fund balance is a key measure of the health of the town,” Michalik said. “It’s important to maintain an adequate level of fund balance.”
She pointed out that since the town’s highest level of fund balance in 2016, the amount had dropped but was now moving in a positive direction.
“You can see you had a little dip there in the middle and now you’re working your way back up,” she said.
The town’s largest source of revenue remains property taxes while it’s biggest expenditure continues to be public safety.
Michalik said the town’s four enterprise funds—water, sewer, stormwater and electric—were meant to cover their costs.
“These funds are intended to be run the same as a business for profit so they’re funded by user charges that are set at an appropriate level to cover their expenses,” she said.
Nevertheless, Kleger said the town’s water, sewer and stormwater funds were still generating losses from operation.
“These funds are typically meant to support themselves,” he said, adding that if they weren’t the town would have to continue to support them with money from the general fund. “That shouldn’t happen in an enterprise fund. An enterprise fund should be able to support itself in operations.”
Mayor Zack Tyndall said the town also had to do more to plan for capital needs. Kleger agreed and said deferring capital improvements could eventually catch up to the town.
“Dealing with those things now makes a lot of sense,” he said.
