Comprehensive Annual Financial Report

 

During its regular City Council meeting Tuesday, the Watsonville City Council held a public meeting to review the Annual Audit (Comprehensive Annual Financial Report) for the fiscal year ending June 30, 2012.  Among the key findings were the following:

  • The City’s auditors, Moss, Levy and Hartzheim L.L.P., Certified Public Accountants have issued an unqualified (clean) opinion on the City of Watsonville’s financial statements.

 

  • The City has been awarded the Government Finance Officers (GFOA) Certificate of Achievement for Excellence in Financial Reporting for twelve consecutive years.

 

  • Net Assets for the City have increased to a high of $269 million, an increase of $19 million from the prior year.  A review of the City’s Balance Sheet shows a positive trend over the last 10 years in which Net Assets have increased from $145 million to $269 million.

 

  • In other good news, General Fund revenues and other sources in Fiscal Year 2012 exceeded expenditures by $849,346.  This helped to increase Fund Balance and represented the first General Fund surplus in the past four years.  In the past three years of the Great Recession the City has used Reserves to offset operating deficits as the City Council has made the policy decision to prevent layoffs of Police Officers and Firefighters.

 

  • Fund Balance in the General Fund increased to $4.3 million in Fiscal Year 2012 from $1.6 million in Fiscal Year 2011, an increase of $2.7 million.  Although an improvement, General Fund Reserve levels remain lower than other comparable local cities.  The City will continue to implement budget measures to improve the City’s Reserves.

 

  • General Fund cash balances in the audit report equal $5.6 million, an increase of $3.8 million from the prior year.  General Fund cash balances restated for one-time accounting adjustments are $8 million which is equal to 2.68 months of expenditures which is greater than the 2 month level recommended by the Government Finance Officers Association.

 

Administrative Services Director Ezequiel Vega stated, “Overall the City is improving its financial condition.  We have to continue to improve in certain specific areas which we are working on.”

City Manager Carlos Palacios stated, “The City is steadily improving its financial position and recovering from the Great Recession which hit communities with demographics like Watsonville particularly hard.  We are still in a difficult financial position and I am concerned that our fund balances are lower than it should be for a city of our size.  Nevertheless, our financial status is stable and improving.”

 

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