Unlike many R.I. municipalities, Jamestown ‘is in good fiscal shape’
The results of Jamestown’s annual fiscal audit confirm that the financial performance of the town and its schools was healthy and stable during fiscal year 2010-11. The results of the third-party review were presented to the Town Council during a work session held on Jan. 17.
The audit was performed by West Warwick-based Baxter Dansereau & Associates. Besides examining all financial records, the firm assessed the town’s reporting procedures, along with its compliance with grant agreements, contracts, laws and regulations.
Paul Dansereau, a partner in the firm, presented an overview of the findings to the council. He said that the records examined for the audit demonstrate that Jamestown, unlike many other Rhode Island municipalities, “is in good fiscal shape.”
For example, Dansereau pointed out, the financial statements for the town’s police pensions include “funding assets of $1 million, which is very good in comparison to a lot of other communities.”
Additionally, Dansereau said, net assets related to “governmental activities” – meaning services to the community – total $17,282,550. Of that amount, $10.5 million is invested in capital assets (such as cars and buildings), with another $2 million set aside for education programs and $4.7 million held in unrestricted fund balances.
“Seventeen million in governmental funds is a real plus for the town,” Dansereau said. “In many communities, pension liabilities are turning [positive] net-asset balances negative.”
Another strong point noted by Dansereau is the town’s unreserved fund balance, which stood at 18.1 percent of the total budget at the end of the fiscal year. That is well above the 15 percent recommended by credit agencies, helping ensure that the town maintains its Aa3 bond rating – the highest rating Jamestown can attain as long as its tax base remains 90 percent residential. (Several of the town’s bonds are rated AAA, but that is only because those bonds are insured.)
Keiser said the 18.1 percent ratio “puts us in the top tier of Rhode Island municipalities, with only Little Compton having a stronger ratio of unreserved funds to general fund budget.” Keiser also pointed out that Jamestown annually returns $150,000 of surplus revenue to the taxpayers as a contribution to the following year’s operating budget.
At the end of fiscal year 2010- 11, the town had a surplus of $398,751, of which $150,000 has been deposited in the general fund. The refund policy started about 10 years ago, with the refunds appearing as line items in the budgets presented at financial town meetings.
Baxter Dansereau performed the audit using the latest Governmental Accounting Standards Board procedures. GASB sets all of the professional reporting standards that all accounting firms must follow when auditing governments and their agencies, with GASB 34 having been the previous standard, which has since been superseded by GASB 54.
Town Finance Director Tina Collins said that learning the GASB 54 reporting rules was a challenging process, adding that under the new rules, “School reports are presented with less detail than they were under the prior reporting requirements.”
During his presentation, Dansereau explained that GASB 54 requires towns to slot all of their fund balances into specific categories, which means that, in most cases, Rhode Island towns have to merge their school-fund balances with the totals for general fund balances. He added that towns are still allowed to break out their schools’ financial reports as long as their municipal contributions to school budgets don’t support a “substantial portion” of school budgets – which disqualifies Jamestown because its property taxes pay for about 96 percent of its school budget.
Here are a few other financial statistics examined in the audit:
• Jamestown’s town and school budget for fiscal year 2010-11 was $20,864,889. The town’s operating expenses were $25,252,429, but its revenues were slightly less: $25,133,219. However, because of cost savings and revenue increases in various areas of town and school operations, Jamestown finished its fiscal year with an overall surplus of $398,751.
• General administrative and public safety expenses ended the year under budget by $69,863 and $22,902, respectively.
• Revenue from real estate taxes, license and permits, and federal stabilization funds were over budget by $204,354 and $94,196, respectively.
• At the end of fiscal year 2010- 11, the town’s unrestricted fund balance – which may be used for town or school purposes – stood at $3,787,541. The school’s restricted fund balance – which may be used only for school purposes – stood at $2,011,818.
• The value of the town’s municipally owned assets decreased slightly ($123,497), but still exceeded the sum total of its liabilities by $24,134,481. Collins said it was a “very healthy” margin.
The audit does not include any breakouts on the returns from the town’s investments, although the report says the returns were generally “under budget due to continued low interest rates on investments.” However, Collins told the council, “We use a benchmark of 7 percent and, the last I checked, we’re right around that rate of return.” Keiser, moreover, said that the 7 percent returns align with his expectations for investment returns.
Dansereau noted that the compliance report on town and school record keeping didn’t reveal any issues of concern, and he expressed his gratitude to Collins and School Finance Director Jane Littlefield for “keeping their books in such good order. It made our job that much easier.”