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Posted: 09/04/13

Audit shows Bruce sewer
needs more funding

Observer Staff Writer
      The yearly audit for Bruce Township shows a healthy general fund, but hints toward an increase in sewer rates.
       The Board of Trustees reviewed and approved of the 2012-13 audit report at its Aug. 21 meeting, receiving a favorable opinion of the township's budgets but a warning about its lackluster sewer fund.
       Aaron Stevens, CPA with Abraham and Gaffney, said new auditing standards have been adopted. Instead of a good audit being referred to as "unqualified" or clean, the new term is "unmodified." In Bruce Township's case, the auditors gave an "unmodified" opinion of the township's finances.
       "The financial statements referred to above present fairly in all material respects," Stevens said. "That is the opinion you want to see as a board."
       The opinion did come with some areas for the board to examine. Business-type activities were shown at a negative $165,000. Stevens said this means the water and sewer systems are not being covered by the current financial resources.
       The sewer fund assets are $329,000, but the current liabilities are $686,000. The operating revenues for sewer is $350,084, an increase of 2.5 percent from the previous year, while the expenses are $421,529, a decrease of 11 percent.
       Stevens said the township's net position for the sewer fund is at $2.7 million, but 92 percent of that total is tied up in the sewer system, meaning it's not available for use.
       "You can't spend the system to operate, it's like selling your car to buy gas," he said.
       Stevens said the township has had operating losses in the sewer fund for the past five years, and suggested the board closely watch the account.
       "It obviously can't keep going the way it's going," he said.
       Clerk Susan Brockmann said the township loaned $550,000 to the sewer fund from other funds, making up the majority of the liability. She said this doesn't require a plan to be sent to the state, but the board will have to re-examine its sewer rates for a possible increase.
       "We do have to review rates, but the funds have leveled off a bit with the last rate increase," she said.
       Another area of concern was the special assessment district fund shown in a deficit of $48,859. This was money borrowed from the fire department to pay for street improvements for the Ponds of Timber Ridge subdivision.
       Brockmann said she would inform the state of a plan to eliminate it. She said once taxes are collected from the special assessment district the fire department will be repaid.
       "It looks like it's a negative because it was in capital outlay as an expenditure," she said. "We haven't received all the tax money back yet."
       The audit also reported on the general fund, which was tracked at $949,456. Stevens said revenues were at $1.01 million, a decrease by 2.5 percent from the previous year. Of it, 50 percent is made up of state shared revenue and 33 percent by property taxes.
       Expenditures were shown at $995,081, a decrease of 4 percent from the prior year. The largest use was general government, such as board, clerk and treasurer expenses at 51 percent. This is up by 1 percent from the previous year.
       "You've maintained a healthy fund balance through the general fund over the course of the five-year period, even when expenditures exceeded revenues," Stevens said.
       Of the general fund, $85,000 is non-spendable and $210,000 is for particular uses or purposes. In other words, $653,048 is unassigned, and represents 66 percent of the township's yearly expenditures. Stevens said this shows improvement, as last year's amount was 62 percent.
       The board accepted the audit report with a 5-0 vote.

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