On Monday, December 11, the Rochester Hills City Council approved additional financial oversight measures of the Rochester Avon Recreation Authority (RARA), after learning of a sharp plunge in their reserves – a decrease in fund balance at the recreation authority from about 20 percent to just one percent. New financial controls by the city include moving to a three-year budget process; having monthly financial reports provided to the RARA board and city councils; requiring RARA to make quarterly budget amendments instead of annual amendments; and developing a fiscal plan to restore the fund balance to 20 percent of total operating expenses.
Rochester City Council also approved the oversight measures, but instead called for restoration of fund balance to 10 percent.
The measures and diminished fund balance were revealed in a fourth-quarter budget amendment submitted to the two city councils for approval, both of which were stunned to learn of the financial situation, which had not previously been revealed to them or city staffs, prior to their council meetings. Additional financial oversight of the Rochester Avon Recreation Authority (RARA) by the city of Rochester Hills is not only appropriate and proper, but necessary.
Formed in 1949, RARA is the number one provider of recreational services in the greater Rochester area, serving thousands of families in and out of the community. As an official taxing authority, RARA receives about 30 percent of its annual revenues from property taxes paid by residents in Rochester, Rochester Hills and Oakland Township. The remainder of its income comes from membership fees, program fees and facility rentals. Per RARA's intergovernmental agreement, Rochester Hills is responsible for administering the financial aspects of the authority.
At the root of the fund balance issue is a 22,000 square foot building purchased by RARA to expand recreational offerings while lowering expenditures. That purchase and renovation was to be paid for with a portion of more than a half-million in fund balance contributions over the past three years. However, plans to purchase the building at 480 E. Second Street were accelerated when it became available earlier than expected. While RARA was authorized to use about $333,000 for the building project, its fund balance for the year, which included other capital outlay projects, was reduced to about one percent of overall operating expenses.
While RARA executive director Ron Jewell said the authority is financially whole, with net assets at the authority still well beyond liabilities, the drop in fund balance was met with concern from the majority of council members in both communities.
That concern was compounded by the fact that some council members were blindsided by the reduction in fund balance, with several Rochester council members learning about the issue from a Downtown newsmagazine article published on December 15 about the Rochester Hills meeting.
While we believe RARA plays an important role in the greater Rochester community, and we are encouraged by the new offerings provided by the new building, we can't help but share the concern expressed by several council members and that of Rochester Hills' fiscal division. As such, we feel the added oversight is fiscally appropriate and will ensure RARA's financial soundness into the future.
As a footnote, comments at the most recent public meeting by Rochester councilman Ben Giovanelli – who referred to the Downtown December 15 article as "fake news" – are histrionics that do nothing to advance the RARA oversight issue. Rather than being dismissive and attacking the messenger, the councilman would do best by focusing on the facts and being proactive in the future on such issues.