Funkstown has 'smooth audit,' but is advised to increase town's fund balance

Funkstown had another “smooth audit,” but Rodney L. Saunders told the mayor and council that town officials should work to increase the town’s fund balance, which is the accumulation of surpluses over the years.

At the end of fiscal 2010-11, which ended June 30, the town’s fund balance was $38,854, according to Saunders and a copy of the draft audit that Saunders, a partner with McGladrey & Pullen, reviewed with the mayor and council during Monday night’s meeting at Town Hall.

Of that amount, $25,201 was unassigned and $13,653 was restricted for tourism activities, according to the draft of the audit.

The unrestricted portion of the fund balance represents 7 percent of the general fund’s total expenditures, which were $362,213 last fiscal year, according to the draft of the audit.

A good way to look at the fund balance is to pretend the town would have no further revenues and had to rely on that fund balance to pay the bills, Saunders told town officials.

That 7 percent would pay the bills for less than a month, he said after meeting with town officials.

After his presentation, Saunders said he didn’t have a target amount in mind for the fund balance, but being able to cover bills for 90 to 180 days is a good idea.

Town officials need to watch the town’s expenses and generate revenue, but they already are doing that, Saunders told town officials.

Mayor Paul N. Crampton Jr. said town officials have agreed to pass along water rate increases from the City of Hagerstown to Funkstown customers.

That also affects sewer bills, because water use is part of the sewer rate formula.

Saunders pointed to the reduction in sanitation and waste-removal costs as a positive move, as well as savings in medical insurance. Trash service was cut from twice a week to once a week during the summer of 2010.

The town’s medical insurance costs were down last year due to a reduction in staff, but are expected to decrease further this year due to a new, cheaper insurance plan, Town Clerk/Treasurer Brenda Haynes said after the meeting.

After the meeting, Crampton said the fee that Maryland Environmental Service charges to operate the town’s sewer treatment plant was negotiated down from $100,000 to $87,000 for the current budget year.

The town had a $35,838 deficit at the end of last fiscal year, but that’s because the state had not reimbursed the town $50,706 in Program Open Space funds, Saunders said. Because the reimbursement didn’t arrive within 60 days of the end of the fiscal year, it can’t count toward last year’s bottom line. But it will help with the current year’s financial statements, Saunders said.