Audit gives Hurlock a ‘health’ report

Hurlock, Maryland
HURLOCK — At the Jan. 25 Hurlock Town Council meeting auditor Roy J. Geiser, CPA presented the financial audit for FY2015 prepared by TGM Group, LLC. He noted the town received an “unmodified opinion which is the highest level of assurance we can give you. We think your books are free of any material misstatements and it is a ‘clean opinion.’”

The town’s Statement of Net Position, called a “balance sheet” in private sector accounting, at the end of FY2015, June 30, was $8,173,646 with $7,780,004 of that amount invested in capital assets, net of related debt. Cash is $2,084.359. That is up by $412,778 over last year.

He said, “There are a couple of new things on here which all relate to GASB 68” pension accounting requirements. “The current outflow of resources is related to the pension.”

As of FY2015 all government entities had to implement GASB 68. Mr. Geiser said the accompanying footnote went from 2 to 10 pages. Maryland’s pension liabilities were “summed up” and an actuarial study was done that explained how it is funded.
Seventy-two percent of the state’s portion was unfunded as of 6/30/14. The study “carved out every town throughout Maryland and sent everyone their piece of it.
Hurlock’s “piece of the pie is .0039377 percent of the 72 percent” with net pension liabilities at the end of the year totaling $698,808.

The Statement of Activities is like an income statement for a “for profit” company. The net position, or “income,” rose by $787,000 in FY2015. Mr. Geiser noted that the increase in “business-type” activities was $40,931 after the transfer of $909,080 from the Water and Sewer Fund to the General Fund.

The cost of all governmental activities for 2015 was $2,568,122. Of that: $207,695 (8 percent) was paid for by program revenues; $1,505,013 (59 percent) was paid for by property tax dollars; and $909,080 (35 percent) was paid for by transfers from the water and sewer fund.

Revenue from business-type activities increased 10 percent; expense decreased by 10 percent; and two major customers account for “approximately 58 percent of the water and sewer revenues.”

On the Governmental Fund Balance Sheet, the unassigned fund balance is $1.9 million which Mr. Geiser said is “good.” He added, “GFOA (Government Finance Officers Association) recommends about 2 months in reserve and you’re about 10 months in reserve. Nice little cushion there.”

Capital assets rose for governmental activities of which part was the new police building. The majority of the Business Type Assets included the water main replacement project.

There was no new debt incurred during the 2015 Fiscal Year. In February, 2016, the town paid down about $183,000 of debt that was due in 2021. That will save $29,000 in interest payments. No new debt was incurred during FY2015.

Other Post Employent Benefits (OPEB), including health insurance, rose by $272,000 and according to Mr. Geiser the amount now stands at about $1.38 million. The Maryland health care plan covers employees and elected officials with specific years of service; or participation with an entity that has participated in the state pension system, and includes spouses and eligible minor children. As of June 30, ten retirees and their families are eligible for these benefits.

Economic factors and next year’s budget and rates as stated in the audit include: Property tax rate will remain at $.8349; personal property tax rate will remain at $1.40; no increase to residential and industrial water and sewer rates; and, the town will pay the balance due on a long term USDA loan of $300,000.

Mr. Geiser concluded, “It’s a very good report. We do a lot of towns and this town is healthy.”

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