Audit: West Point in good financial health

Andy Davis, third from left, goes over West Point's audit while other city leaders follow the numbers during Monday night's study session.

By: 
STEVE ROGERS
Staff Writer


West Point's general fund, electric department and water and sewer utilities all received a clean bill of health in recently completed audits.


Selectmen accepted the audits Tuesday night after being briefed on the results during a study session Monday night by Andy Davis of Watkins, Ward and Stafford, the city's accounting and auditing firm.


"Pretend you are a doctor and are giving us our checkup. Give us the state of our health," Mayor Robbie Robinson told Davis after his 40-minute presentation.


"Your cash is improving, you continued the progress from 2016," Davis said of the audit, which covered the 2017 fiscal year that ended June 30, 2017.


"While the $249,774 positive fund balance is a positive, the big thing in 2017 is the hit you took in sales tax revenues," Davis added, referring to an overpayment the state discovered in sales tax revenues in early 2017 and started making the city repay.

That continues through June 2019 at the rate of more than $50,000 a month.


"I've been going through these a long time and this is the first one I can remember where we had only one citation, large or small," Selectman Keith McBrayer added.

"It's pretty rare to have only one finding," Davis responded.
"It's a clean opinion, a good opinion," Davis emphasized.


That finding was in the electric department where a retiree kept city insurance but wasn't paying the premiums in a timely manner.

The money eventually was collected and the retiree no longer is continuing city insurance.
The city also changed its policy so retirees are warned if they fall behind on insurance payments and can be cut off.
Davis also said the city's accuracy in estimating and collecting property taxes was well above average, noting his staff compared the tax rolls and property assessments with tax bills and collections and found that of more than $10.1 million, the numbers were off only $549.


"That's very minimal and insignificant," he said.
One on-paper number worth noting, according to Davis, is the city's unfunded pension liability which topped $10 million across all three budgets.

That's what the state retirement system estimates the total state pension system is underfunded and it has allocated those costs across every city, county, school district and other agency in the state based on their share of the total system.


"Every government entity balance sheet in the state really took a nosedive when everyone had to start accounting for these numbers," Davis stated.
The city's electric department showed a small operating loss of $49,283, up from a loss of $6,661 in 2016.


Overall, 71.5 percent of all electric department revenues went to pay the Tennessee Valley Authority for electricity the city bought to pass on to customers.

The remaining revenues went for maintenance, operations, insurance and related expenses.


The 71 percent is on par with most utilities, Davis said, noting electric utilities are an area where cities have the least control over costs.
"Our rates didn't quite cover expenses," he said, noting estimating future expenses isn't always easy.


Overall, the electric department's net cash increased from 2016 to 2017, Davis pointed out.
In the water and sewer department, the accountant noted "long-term debt is high," but "that's not unusual" because of all the state and federal regulations utilities have to meet.


"It's a tremendous burden," he described. "...It's one of the reasons you are seeing so many small rural water districts selling out," he noted.


Overall, the system is an "aging" one but is managing its debt well, including paying off $3.2 million for the new automated meters and $4.3 million to bring the old Sara Lee wastewater treatment facility, which was given to the city, into compliance with current regulations.


The water and sewer side of city utilities have some reserves which have prompted some suggestions for lower rate, but part of those reserves already are committed or soon will be, including more than $100,000 which will be paid for relining sewer lines along Church Hill Road which have been the source of several problems in recent years.
In addition, it's been 17 years since the city's water treatment plant has been serviced. That will cost between $400,000 and $500,000, but the city will be able to pay cash for that work.

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