Auditors with Plante & Moran on Monday, May 15, gave the city of Rochester Hills an "unmodified opinion" of accounting practices for the 2016 fiscal year ending on December 31, 2016, noting the city is "financially sound."
An "unmodified opinion" is the highest rating of practices that can be given in an annual audit of municipal accounting practices, meaning that processes and accounts have been properly stated and done to the highest level of assurance.
"The city is still very financially sound," said Lisa Manetta, a partner with Plante Moran who worked on the city's audit. "In addition, we are always happy to see the quality of services and quality of life provided to residents while maintaining that standing."
Auditors said the city's use of a five-year budget projection, low legacy costs and continuation of investing in capital outlay programs, rather than deferring maintenance for many years, has helped to put the city in a good position financially that many municipalities of similar makeup aren't experiencing.
Of particular note was the city's second consecutive year of experiencing a structural surplus for the city, meaning recurring revenues are higher than recurring expenditures. Total revenues for the city in 2016 came out to $55.8 million with expenditures totaling $55 million. In 2015, revenues totaled $53.4 million and expenditures totaled $55.4 million.
Auditor Joe Heffernan, partner at Plante & Moran, said while a structural surplus may sometimes indicate structural issues in budget planning, the city's planned spending of expenditures and the slight increase of revenues confirms a sound financial approach being taken by the city.
The increase in revenues, of which the majority comes from residential property taxes, is due primarily to increases in property values, the auditors said. An increase from 2014 to 2015 revenues included both increased property values, as well as an increase in the city's millage rate. Revenues outside of property taxes remained relatively flat, with the exception of a slight increase in interest from investment earnings.
Expenditures increased slightly in general government and public safety funds from 2015 to 2016. While capital outlay spending decreased from 2015 to 2016, from $14 million to $11.4 million, Heffernan said the levels show a commitment to infrastructure projects that many similar cities can't afford.
"In capital outlay, the majority of communities in southeast Michigan after 2009 or 2010 (scaled back), but they haven't come back up in that spending, and the reason they haven't come back up is because the revenue isn't there," he said. "Most communities aren't able to ramp back up to normal replacement, and are struggling with it."...continued on page 2