After two years of spending down cash reserves in its general operating fund, the Village of Brookfield finished the 2003-04 fiscal year with its financial bottom line virtually unchanged.
The most recent audit of Brookfield’s finances, released earlier this month, showed that in 2003-04 expenditures in the village’s general fund exceeded revenues by $53,132. By contrast, during the 2002-03 fiscal year, the general fund balance was depleted by $1.7 million.
According to the audit, completed by Crowe Chizek and Company, on May 1, 2004 the village had $2.78 million in its general fund balance, roughly what it was at the end of the 2002-03 fiscal year. Of that total, $1.9 million (roughly 18 percent of the village’s total budget) was considered undesignated.
That’s not to say that revenues and spending went unchanged during 2003-04. In fact, Brookfield’s revenues increased dramatically during the 2003-04 fiscal year, due to a 52-percent increase in property tax revenues. The tax increase was due in large part to the Police and Fire referendum. The village also took in another $750,000 in grant money that went toward the purchase of park land from School District 103.
During 2002-03, the village took in $8.1 million. In 2003-04, revenues jumped to $10.6 million, which was offset by a corresponding increase in expenditures, which hit $11 million. A $400,000 transfer from the Motor Fuel Tax fund to cover the cost of ongoing street maintenance closed the $365,000 gap.
The village also increased its debt load during the 2003-04 fiscal year. While still well under its limit, Brookfield borrowed nearly $7 million (an increase of 90 percent) during that time period, including $6.2 million and $1.5 million in debt certificates for the infrastructure rehabilitation program and park land purchase respectively.
While the village’s general fund was a relatively break-even proposition during 2003-04, its water/sewer and garbage funds continued to act as profit centers. The water/sewer fund posted a gain in its operating income of $1 million, while the garbage fund grew by another $38,000. As of April 30, 2004, the combined reserve in those funds reached just under $9 million.
However, that money can’t be used to fund general operating costs unless the village board declares the money to be a surplus.
“The water fund should not be break even if we’re not doing capital improvements,” said Finance Director John Dolasinski. “We should be accumulating resources to repair and replace water infrastructure.”
But $9 million in reserve?
“What that says is we should be doing more capital projects,” Dolasinski said. “But in practical terms, when you don’t have a lot of staff in the manager’s office, it’s hard to do. It would be a real burden on them to be doing another million [dollars] in projects each year.”
Dolasinski said that the village is now more properly charging costs to the water and garbage funds. In the past, some water/sewer administration costs were being paid out of the general fund.
“I inherited the 2002-03 budget, and I couldn’t make heads or tails of it,” he said.
Dolasinski has reconfigured the entire chart of accounts since his hire in late 2002. It’s a change that hasn’t gone unnoticed by the village’s auditors.
“For the second consecutive year the village prepared their own financial statements,” wrote the audit firm in its management letter accompanying the audit. “[Its] continued ability to prepare financial statements with minimal assistance represents a significant accomplishment for the village Finance Department.”
The auditor’s report also reiterated shortcomings in the way the village handles its finances, including a common practice where the same employee may take payments and record receipts. The auditor suggested separating those duties to avoid potential fraud.
The auditor also offered a criticism of the way money for general operations is lumped into a single checking account, which veils the fact that, at times, some funds are not able to meet their commitments.
In addition, the auditor repeated a suggestion that the village institute a formal procurement policy for spending.
It’s unlikely that Crowe Chizek will regain its status as Brookfield’s auditor next year. An Audit Committee of trustees Alan Dorobiala, Kit Ketchmark and Linda Stevanovich was named to interview auditing firms for next year. Crowe Chizek merged in 2004 with PTW, the auditing firm that had served Brookfield for last several years.
The due date for proposals is April 28, and Dolasinski said there is “a great deal of interest” in the job. He expects to receive proposals from seven or eight auditing firms.
