WARWICK, RI — Blum Shapiros’s unqualified audit opinion of Warwick’s finances shows a combined city-school budget surplus of $9,559,726 and $347.2 million more in liabilities than assets, the latter a long-term obligation which will not come due either immediately or all at once.
An unqualified opinion is an independent auditor’s judgment that a company’s financial records and statements are fairly and appropriately presented, and in accordance with Generally Accepted Accounting Principles (GAAP). An unqualified opinion is the most common type of auditor’s report, according to investopedia.
The surplus was realized by gross city revenues exceeding budget expectations by $7.0 million, and expenditures below budget by $2.56 million. The savings were primarily realized in Public Works ($1.1 million) and the School Department ($1.2 million), according to a statement on the audit by Interim Finance Director Bruce Keiser.
The city’s enterprise funds, water and sewer, were at $9.5 million and $102.5 million respectively. The funds’ bond debt is paid by service fees, independent of property taxes.
The $347.2 million, or net position, the difference between assets (revenue, equipment and property) and liabilities (payroll and benefits, bonds, pension liabilities), is effectively a statement of the City’s net worth, according to the audit report.
The City’s total net position decreased by $13.3 million in fiscal year 2017, according to the report, in part due to a newly-adopted accounting method, GASB45, which requires accrual-basis measurement and recognition of OPEB (other post-employment benefits/pensions) cost over a period that approximates employees’ years of service, actuarial accrued liabilities associated with OPEB and progress in funding the plan.
“One key factor was the accrual of an additional $18.8 million in post-retirement benefits in accordance with GASB45. Additionally, a $19.8 million decrease in the City’s net pension liabilities was reduced by an increase in the net deferred pension inflows, which also totaled $19.8 million, and a decrease in the deferred pension outflows which totaled $9.1 million. The City’s total long term debt decreased by $8.9 million and year-end accounts payable and accrued liabilities decreased by $4.3 million,” according to the report.
The City’s total liability for bonds and loans payable decreased by $8.08 million to $145.6 million.
There was also good news in the report for the City Council-approved $40 million school improvement bond. State statute limits the amount of bonds a municipality can issue to 3 percent of its total assessed valuation. The current debt limitation for the City is $281,239,857. As of June 30, 2017, the City’s current outstanding general fund debt stood at $234,685,417, leaving room for the $40 million bond voters will weigh in on in November.
Editor-at-large Joe Hutnak contributed to this report. Warwick Official Statement
Author: Rob Borkowski
Rob has worked as reporter and editor for several publications, including The Kent County Daily Times and Coventry Courier, before working for Gatehouse in MA then moving home with Patch Media. Now he's publisher and editor of WarwickPost.com. Contact him at [email protected] with tips, press releases, advertising inquiries, and concerns.
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