Schenectady

Independent auditor issues ‘clean report’ for Schenectady

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SCHENECTADY – An independent auditor on Monday gave city leaders “an unmodified opinion” of its review of financial statements, the highest level of assurance the company could give.

“It’s considered a clean report, no reportable issues and no findings,” John Tafilowski of Cusack & Co. told the City Council’s Finance Committee of his company’s draft audit result concerning the fiscal year that ended Dec. 31.

The company spent three week’s reviewing the city’s financial records, and Tafilowski went line by line of key elements.

During a pandemic-plagued 2020, the city’s general fund, the chief operating fund, spent $84 million, resulting in a deficiency of $3.7 million. Most departments were within budget because of efficient operations, with the exception of transportation, which was over budget by $81,000 due to a big, late-year storm.

Its water fund had a surplus of $890,000, its sewer fund was deficient $167,600, while its recreation fund had a surplus of $149,000.

Grants and other revenue funds were deficient $155,000, while capital projects had an overall deficiency of $17.6 million, primarily because of bonding received in previous years, combined with the city expending the money on capital projects this year, Tafilowski said.

The city complied in all material respects with requirements that could have a direct and material effect on all of its major federal programs, and it had no deficiencies in controls over compliance of material weaknesses, the auditor said.

In April, Standard & Poors affirmed the city’s general obligation bond rating of A, with a stable outlook. In January, Moody’s Investor Services affirmed the city’s general obligation bond rating of AAA.

The city’s expenditures of $84.5 million exceeded revenues of $80.8 million.

As a consequence, the mayor instituted a hiring freeze at the start of the COVID-19 pandemic in March 2020, and the mayor and finance commissioner cut overtime in its entirety, while non-personnel budget lines were reduced 20%, to control costs.

The transportation department was over budget by $81,483, largely because of a Dec. 17 storm in which more than 30 inches of snow fell on the city.

Also, in February 2020, the city settled a contract with the Police Benevolent Association, at an increase of $1.6 million.

Operational revenue fell short of the budget amount by $4.8 million, including a prior year tax lien collection that fell short by $942,000. Interest and penalties on property taxes was under budget by $773,000. Interest and penalties were waived by the city for for much of the year.

Also, projected revenue from the Rivers Casino & Resort Schenectady fell short by $1.5 million due to pandemic closures, the auditor said, and state aid revenue fell short by $560,000. Property sales fell short by $368,000.

On the other hand, sales tax revenue exceeded the budget of $13.2 million by $117,000, and an audit of the city’s energy bills resulted in a net prior year refund of $598,000, the auditor said.

The general fund called for the combined use of $5.7 million in reserve funds and unassigned funds, of which the city used $3.6 million.

The fund balance of reserves on Dec. 31 was $10.7 million, with $2.7 million in restricted funds, Tafilowski said.

“We feel, overall, that management does a really good job maintaining their reserves,” he said.

The city’s proportionate share of net pension liability for retired city employees was $12.2 million, nearly quadruple from a liability of $3.3 million in 2019.

Similarly, the city’s proportionate share of net pension liability for police and firefighters soared to $43.2 million, from $14.6 million in 2019.

Tafilowski attributed the increases to the market being in “the tank” at the time of the valuations in March 2020.

Meantime, the city’s combined “other post employment benefits” increased $42 million, to $332 million.

Tafilowski called the net pension liabilities and post employment benefits “paper liabilities” that are not funded.

Councilman John Polimeni thanked Commissioner of Finance & Administration Anthony Ferrari and his team for “another excellent audit result.”

“We have a hardworking team here and they do a really good job” of multiple reviews of city finances, Ferrari replied.

Once the audit is complete, Cusack & Co. will send a management representation letter for Ferrari to sign, and then the City Council would vote. If approved, the firm would then send the representation letter to the federal government.

Categories: News, Schenectady County

4 Comments

David Bianchi

The government can only acquire private lands if it is reasonably shown that the property is to be used for public purpose only.

David Bianchi

I Want to Remind You. When the Government Makes Laws.
They Are Very Careful of the Words They Use.

There is a Major Difference in the Words Can and May that they have both Used when Making Laws!!

Again, The Law As Written!
(The government can only acquire private lands if it is reasonably shown that the property is to be used for public purpose only.)

I’m Not Sure How Many Laws The City Had Broken! More Then One I Assure You!

Publicly No Less!

David Bianchi

Lord, Please, if Only I Could Be Given a Proper Day in Court with Proper Representation to Present All of The Evidence to Show What The City of Schenectady had Unleashed Upon My Mother and I with a String of Wrongdoings and What it Did to My Family and I With These Wrongdoings!
(All For a Row of Townhouses?)

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