Tag: cafr

Why did DeKalb change its employee numbers going back 10 years?

I was looking up city budgets yesterday and thought that information on numbers of employees would help provide more context for what I was seeing.

My resource for this is the Comprehensive Annual Financial Report (CAFR), not the CAFR itself, but a report appended near the end of the document that’s called “Full-Time Equivalent Employees,” or as I call it, the FTE report.

The FTE report does not tell you how many people the city employed, but it does tell you how many FTEs it budgeted for in each city department during the fiscal year just closed, plus the FTEs budgeted each of nine additional years back.

Imagine my shock when I saw that the FTE report attached to the FY16 CAFR changed all the historical data. Continue reading Why did DeKalb change its employee numbers going back 10 years?

Pension Plan Membership as a Factor in Jump of Net Pension Liability

DeKalb’s latest Comprehensive Annual Financial Report (CAFR) is out. It covers Fiscal Year 2016, which ended June 30, 2016. The big news is the net pension liability.

Public safety expenses related to the operations of both the Police Department and Fire Department accounted for the largest share of expenses at $33,400,660 or 50.1% of the total. This represents a 50.1% increase from the FY15 total of $22,259,920. This increase was due primarily to the increase in the net pension liability for police and fire pension plans.

Yes, the city’s net financial position was reduced in one year by $12.4 million, and an increase in long-term liabilities accounts for about three quarters of the loss.

We can attribute a combination of factors in the increase in liabilities, not the least of which were investment returns coming in well under the actuarial assumption of 7.5%. However, today I’d like to focus on the growth of membership in the public safety pension plans, because it’s shocking to see them escalate like this while DeKalb itself is shrinking.

[easychart type=”vertbar” width=”420″ title=”Public Safety Pension Funds Membership” groupnames=”PD Members, FF Members” valuenames=”04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14, 15, 16″ group1values=”91, 93, 94, 97, 101, 100, 98, 99, 101, 107, 108, 111, 115″ group2values=”92, 97, 98, 105, 105, 105, 104, 102, 106, 107, 113, 116, 116″ minaxis=”90″] Continue reading Pension Plan Membership as a Factor in Jump of Net Pension Liability

Auditors Identified a “Significant Deficiency” in City of DeKalb’s Internal Accounting Controls

City of DeKalb’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2016, contains a letter to management from the auditors that discusses a “significant deficiency” in DeKalb’s internal accounting controls.

The DeKalb city council is set to discuss the report during its Committee of the Whole meeting January 9 at 5 pm.

Here is how the auditor defines “significant deficiency” in the management letter (my emphasis):

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Continue reading Auditors Identified a “Significant Deficiency” in City of DeKalb’s Internal Accounting Controls

DeKalb’s $10 Million Budget Hole

I’ve had a preliminary look at DeKalb’s FY17 budget.

The proposed operations (General Fund) budget, which begins in January, has $2.8 million in additional spending for personnel alone when compared to the FY16 budget that ended June 30. (I am ignoring the current six-month “FY16.5” budget at this time.) Biggest jumps:

$743,000 more in regular wages
$485,000 more for health insurance
$1,712,600 more for police and fire pensions

Total operations spending from the General Fund (GF) is projected to be up $3.3 million as compared to revenues, which are expected to increase by only $2.5 million.

How are they bridging the gap? I’ve spotted three ways so far: Continue reading DeKalb’s $10 Million Budget Hole

New Annual Financial Report is Out

City of DeKalb released its Comprehensive Annual Financial Report (CAFR) for fiscal year 2015, which ended June 30.

I’m sure city staff will also release the Popular Annual Financial Report (PAFR) as they did last year. It’s a dumbed-down version of the CAFR that nobody asked them to compile, but they get some sort of warm-fuzzy award for it, so it’s all good.

Let’s update some charts. First, the hiring news:

[easychart type=”line” width=”420″ title=”Full Time Equivalent Employees by Fiscal Year” groupnames=”FTEs” valuenames=”01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14, 15″ group1values=”224, 231, 240, 237, 250, 254, 261, 262, 249, 241, 211, 209, 217, 225, 234″ minaxis=”208″]

The hiring spree is still on.

The General Fund budget for personnel expenses this year is $26.9 million, a rise of 2% over last year and a net increase of $500,000 in this budget category. There are a couple reasons why the increase was “only” 2%. The primary reason is that a chunk representing another 2% was sent over to the Water Fund for Water to pay. They’ve also succeeded in reducing health care costs (something I’d like to compliment them on sometime, if only they’d stop annoying me for a minute with the Bozo no-nos).

But wages and pension costs are both increasing well above inflationary levels. I anticipate they will have to come up with $500,000-$700,000 more for this budget category next year.

In other words, despite the rosy picture staff will paint next month in an effort to persuade the city council to hire a human resources director, the council should no way, no how approve any more hires and, in fact, should let attrition do its work for awhile. Continue reading New Annual Financial Report is Out

DeKalb’s Shortage of Magic Rabbits

As the city ponders a property tax hike of 37% as well as water rate and fee “adjustments,” you may wonder how DeKalb has got itself mired in financial straits.

It’s actually nothing new. DeKalb’s budget issues are — and have been since at least 2005 — the result of snatching nearly every penny of revenue growth and putting them into more staff and higher salaries, to the detriment of other areas such as street maintenance.

Worse yet, DeKalb has to come up with, at minimum, a half-million new dollars in revenue each budget cycle just to stay abreast of annual personnel cost increases. It’s rendered the financial gurus unable to look ahead more than 12 months at a time because they continually need to chase the next rabbit for the proverbial hat.

Want proof? The stated Number One strategic priority of the City of DeKalb is “Infrastructure,” yet capital improvements are precisely the area that’s been starved in the current budget. That’s pretty messed up.

And a proposed 37% hike in property taxes bespeaks the latest shortage of bunnies for the hat trick. Continue reading DeKalb’s Shortage of Magic Rabbits

Numbers to Consider During the Budget Process

The data for the following charts come from Comprehensive Annual Financial Reports (CAFRs).

In view of DeKalb staff’s continually stated desire to hire, I’ve begun with a look at the numbers of full-time equivalent employees. The city is using a figure of 220 city employees during its budget process instead of the most recently available CAFR number of 230. I’ve arbitrarily split the difference for the chart.*

[easychart type=”line” width=”420″ title=”Full Time Equivalent Employees by Fiscal Year” groupnames=”FTEs” valuenames=”01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14″ group1values=”224, 231, 240, 237, 250, 254, 261, 262, 249, 241, 211, 209, 217, 225″ minaxis=”208″]

No matter whose number you use for the past year, DeKalb’s been hiring at a brisk pace following the Great Recession crash-and-burn. However, some council and Financial Advisory Committee members would like to start putting the brakes on hiring. Let’s look at why. Continue reading Numbers to Consider During the Budget Process

Variable Revenues are Replacing Taxes in DeKalb & This is Not Good News

A few days ago in another post I said this:

Fine/fee revenue can be highly variable, as we’ve seen with the disappearance of building permit revenues. TIF districts have time limits and both of ours expire at the end of the decade. These are appropriate sources for making capital improvements as you can. They are not meant to cover permanent, fixed costs yet that is exactly what is happening.

That post ran long, so I saved elaboration on the above point for another day. But now I’ve picked it back up with a vengeance. Continue reading Variable Revenues are Replacing Taxes in DeKalb & This is Not Good News

Post-Recessionary Trends & Responses

The City of DeKalb released its FY2014 Comprehensive Annual Financial Report last month, and as usual there’s plenty to digest. A large part of this report draws data from supplemental reports found in the back of the CAFR, some of which track the past 10 fiscal years and are therefore useful for understanding the lingering effects of the Great Recession on the local economy.

First up, I’ve prepared a chart of taxable sales. Retail sales taxes make up more than 40% of DeKalb’s operating budget — no other single revenue category comes close — so sales and the taxes they generate are important indicators of economic health.

The advantage of looking at the sales themselves instead of the tax revenues is that you don’t have to account for sales tax hikes, abatement deals and other “noise” in the data.

[easychart type=”vertbar” width=”420″ title=”DeKalb’s Taxable Sales in Millions” groupnames=”Locally Taxable, State Taxable” valuenames=”’04, ’05, ’06, ’07, ’08, ’09, ’10, ’11, ’12, ’13” group1values=”356, 377, 405, 415, 407, 367, 385, 384, 379, 381″ group2values=”514, 540, 582, 594, 590, 528, 542, 535, 529, 523″ minaxis=”355″]

Of course there’s a lot of overlap between state and local sales, but showing them both underscores the trend, which is this: Taxable sales have stabilized since 2009, but they’ve more or less stabilized at 2005 levels.

And it’s not just retail sales that have stagnated. DeKalb’s share of the state income tax is climbing, but so far has only made it back to 2008 levels. Utility tax revenue totals for FY2014 were less than FY2012’s.

Water sales were down by 5.2%. If you think about the combo of utilities and water falling, it seems likely that it can’t all be about plugging leaks and conservation. DeKalb’s likely still losing population.

City government, however, is bucking that trend. Continue reading Post-Recessionary Trends & Responses