Columbia’s financial books have received an official stamp of approval, symbolizing a turnaround from almost a decade ago when they were in such disarray the city had deficits in 10 funds and leaders did not know how much money the city had.
A certificate of achievement for Excellence in Financial Reporting from the national Government Finance Officers Association granted Columbia the organization’s best rating in 16 of 17 categories.
“The Certificate of Achievement for Excellence in Financial Reporting is the highest form of recognition in governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management,” the organization wrote in August to Jeff Palen, Columbia’s chief financial officer.
It is the first time in eight fiscal years that Columbia has applied for or been granted a certificate, Palen and an association official said.
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“The award ... to the city and its Finance Department should help our citizens feel confident that the current staff and administration are not just preparing the year-end statements in compliance with generally accepted accounting principles, but that the reports reflect full disclosure, transparency and accountability that will help the readers understand the financial picture of the city,” Palen said.
The city had not applied for a certificate of achievement since 2005 even as it had been awarded the recognition almost every year between 1984 and 2005, said Jake Lorentz, senior technical manager at the Chicago-based organization.
More than 100 government entities in South Carolina were granted the same recognition for fiscal 2012 as was Columbia, according to the association’s website. Other S.C. recipients include 33 other municipalities, 17 counties, 11 colleges and a range of school districts as well as employee benefit and enterprise funds.
Those awards are for the fiscal year that ended June 30, 2013 – not for last year’s spending that covered the period through June 30, 2014.
Yet Columbia City Hall is poised to finish the 2013-14 fiscal year in the black, according to its most recent projections through the end of September.
Water and sewage services – Columbia’s largest source of revenue – is projected by Palen’s office to have a $15.9 million surplus by the time the city’s finances are independently audited in a month or two.
The general fund, which pays for most other city operations, is projected to enjoy a $3.9 million surplus, according to the third-quarter projection.
Parking services is to have a surplus of almost $366,000, according to the estimate that includes revenue from meters, parking fines and garage-use income.
“I’m not really anticipating any changes between now and the end of the audit,” Palen said of the projected surpluses.
Asked to compare the state of Columbia’s finances to the dark days of 2007, ’08, ’09, Palen and city finance director Jan Alonso responded with a quote from Mayor Steve Benjamin. “The transformation of our city’s finances over the past five years, including years of budget surplus and improved credit ratings, speaks volumes about our firm commitment to fiscal discipline. I could not be more proud of our staff, our finance staff in particular, for continuing to exceed our expectations every year.”
Palen and Alonso said the improving financial picture also strengthens the city’s borrowing power. “Last year the city’s general obligation bond rating improved to AA+ while Moody’s reaffirmed our Aa1. (T)hat allows us to borrow money at lower interest rates.”
The national association told the city it needed significant improvement in the way it posts “fiduciary fund” statements. Those are funds that track resources held by outside parties, for example, the police canteen operation, special employee activity fund and other such expenditures.
A finding of “needs significant improvement” in theory could jeopardize future certification.
“Sometimes what it means is the deficiency is so severe that if the government does not fix it, it will not get a certificate the next reporting period,” the association’s Lorentz said. Neither Lorentz nor Palen would discuss Columbia’s deficiency in depth because such findings are covered by confidentiality, they said.
But Palen said the amount of money questioned in the city’s fiduciary fund is $33,673 out of a citywide 2013-14 budget that exceeds $233 million.
“There’s really not a lot to it,” he said of the deficiency. “They don’t like how we reported it. They don’t like that we didn’t break out that trust account.”
The certificate is a welcome outcome after a few financially turbulent years for City Hall.
The recognition follows a complete turnover in personnel in Columbia’s finance and accounting department since 2007 and 2008, when the city was 18 months behind on closing the books on fiscal 2007.
Financial tensions were worsened at that time by discoveries that the city was unknowingly double-paying some of its bills, City Council had siphoned millions in water and sewer revenues into other accounts and the city’s chief financial officer resigned.