By Matt Schepeler
The Brooklyn village council got both good news and bad news from its auditor at the Jan. 23 regular meeting.
Jacob Schierbeek of auditing firm Yeo & Yeo CPA of Ann Arbor informed the council that the village received an unmodified opinion, the best opinion that can be given to a municipality. However, Schierbeek noted that there were concerns with deficit fund balances and untimely reconciliations.
“We thought those were important enough to point out in the opinion itself,” said Schierbeek.
The deficits come from the sewer and water funds.
“For the last 10 years, revenues have been pretty close to expenses, but as I’ve said, the last couple of years you actually did enter into a deficit balance in these funds,” he said.
He noted that this “did not happen overnight. It has been a trend that needs to be addressed now.”
The fact that the issue has been brought to light means that the village must file corrective action with the state, and the council did take action that night. Specifically, the council:
*Approved a deficit elimination plan for the water fund. In a letter to the Michigan Department of Treasury, officials noted that they have already approved an increase in the ready to serve rate for residential customers, which took effect this year. “A further adjustment in the ready-to-serve rate for multi-unit residential and commercial customers will be considered in fiscal year 2017,” states the letter.
*Approved a deficit elimination plan for the sewer fund, which will include considering a ready-to-serve rate adjustment for multi-unit residents during fiscal year 2017.
*Approved a deficit elimination plan with the internal service fun. In this resolution, it was stated that the village “would be more judicious in recording equipment rental and transferring funds from the appropriate village funds.”
*Approved a corrective action plan to be filed with the state, which addresses several minor issues. Officials hope that taking quick action in each area will “negate any possible negative financial impact for the village,” such as the loss of state revenue sharing.
Schierbeek pointed out that while the overall net position in the water and sewer accounts remains positive due to property and equipment, “that doesn’t necessarily matter to the state because you don’t have access to those funds.”
Another area of concern for the village is untimely reconciliations. “Those were a little behind, and we just feel that bank [reconciliations] should be done at the end of every month,” he said. “Going forward I am sure that will be taken care of. It just gives you more time to catch things in a timely manner.”
Schierbeek also pointed out that the village has not been following its policy of creating a purchase order for anything costing more than $200.
“That is not being consistently followed,” he said. “Whether you want to keep that policy is up to you. But if you keep it, you should stick to it.”
Council members were in agreement to keep the policy, and to follow it more strictly. “I hate to tell you, Jae, but if [the policy isn’t enforced], it is going to be on you,” said village President J.B. DeJeu to manager Jae Guetschow.
Schierbeek also noted that the village should have a credit card policy in place.
While the news seemed bad, Schierbeek noted that currently the unassigned fund balance in the general fund “is still pretty healthy at the end of this year it is sitting at $374,000.
“The general fund is doing just fine.”
In regards to revenues, 42 percent of the village’s income comes from taxes; 32 percent from charges for services, which is mostly made up of maintenance agreements; 18 percent comes from state revenue sharing and five percent from rental income.
Expenditures consist of 33 percent for general government, which includes personnel and building expenses; 33 percent for public works; 12 percent for debt service and 14 percent for other functions.