Davison Township receives clean audit report

DAVISON TWP. — Auditors offered praise to the township for what they consider an accurate annual audit, one that reflects officials who stayed on top of things to keep accounts in the black.

Pamela Hill and Chris Gilbert, auditors from Plante Moran, gave the audit report to the board at its Dec. 11 meeting. The report showed an “unmodified opinion” where the auditor expresses an opinion that financial statements are presented, in all material respects, in accordance with applicable financial reporting framework.

Gilbert went over the audit’s findings, focusing first on revenues. He looked at the three largest revenue sources for the township and said everything showed an increase from the 2019 fiscal year.

Property taxes, he said, were up almost $1.5 million this year, an increase of about $60,000 from 2019. This was due to property taxes increasing slightly from the previous year.

Special assessments were $3.6 million for the year, an increase of $444,000 from 2019. Most of that, said Gilbert, is due to the increase in the fire protection assessment added by township officials to help pay for the rising cost of medical runs by the fire department.

The third revenue source looked at was inter-governmental funds, which is also known as state shared revenue. The township received $2.1 million for the year, mostly generated by state sales taxes and a smaller amount from federal and state programs which the township oversees.

“This fluctuates from year-to-year,” said Gilbert. “This year showed an increase by $260,000 from the prior year. That is really linked to a CDBG (Community Development Block Grant) reimbursement-based grant.”

Total revenue, he said, was just more than $8.1 million, which is an increase of $566,000 over 2019. This was mostly due to federal grants and the fire special assessment.

Overall expenses for the township were about $7.6 million, which Gilbert said was actually a decrease from 2019 of about $112,000. He said police and fire represent about 50 percent of general fund and public works another 25 percent.

In the end, Gilbert said the general fund increased by about $618,000 from 2019.

“This allowed the township to set aside some money, which is good because as you continue to grow, you’re going to have to plan for the future,” he said.

Hill said the township didn’t add to its fund balance by accident. It showed a surplus because everything came in mostly on or under budget on the expenditure side.

“Expenses were really monitored and cuts were made to make sure that with the pandemic you guys were able to weather the storm here,” said Hill of the previous board, three members of which were voted out in November while a fourth retired. “The township was significantly under budget in a number of categories. Monitoring and tracking of accounts – you did a good job there. Great job on the budgeting side.”

In the township’s water and sewer fund there was operating revenue of about $6.8 million, and operating expenses of about $6.33 million –which means operating income of about $475,000.

“This seems to indicate customers are covering the full costs of the services being provided,” said Gilbert. “The net position of the water and sewer fund did increase by about $726,000 during fiscal year 2020. So, the net position in total ended up at just under $13 million as of June 30, 2020.”

Treasurer Tim Green, one of four new members of the board, asked if it was standard practice by most communities to have $12-13 million sitting in a water and sewer fund?

Gilbert clarified that of the $13 million “surplus” almost $10 million of that is invested in the sewer and water infrastructure. The other $3 million is in the fund for repairs and maintenance.

“I don’t know that there’s a standard amount for water and sewer. It’s so infrastructure driven. That’s why you have $10 million net invested in the system,” said Gilbert. “When you have a break or a leak it’s not typically a $20,000 repair. It’s hundreds of thousands of dollars. The unrestricted portion is set up, so you don’t have to go get a loan if you have a pipe break or something.”

Gilbert said the township wants to make sure it stays in an upward direction or stays relatively consistent. If the fund decreases over time it suggests current users of the system aren’t supporting the costs of running the system.

That unrestricted amount is up about 10-15 percent this year. Hill said it’s not uncommon for a community like Davison Township that’s growing for that number to be growing as well.

Hill also suggested the township look into a capital improvement plan which is a five-year plan of where officials want the township to be in the next five years and how they will pay for it.

The board voted unanimously to accept the report.