Auditor praises improvements in village’s financial records

By LeAnn R. Ralph

COLFAX  —  Now that Lynn Niggemann, village administrator-clerk-treasurer, has had a full year to work with the village’s financial records, the auditor says he is pleased with the improvements he sees in record keeping.

Eric Davidson with Bauman Associates presented the 50-page auditors’ report for 2015 to the Colfax Village Board at the September 12 meeting.

“(The year) 2015 was Lynn’s first full year, and I saw improvement in the records,” Davidson said.

“Lynn did a really good job (with adjustments),” he said.

As is the case with all small municipalities, “it is not cost-effective to hire enough people to do all of the (financial) functions,” Davidson noted.

The Colfax Village Board provides oversight, however, and the functions “are about as segregated as they can be with two people” in the clerk’s office, he said.

The village’s financial records “will continue to improve the longer Lynn is here,” Davidson said, adding that Niggemann and Sheila Riemer, deputy clerk-treasurer, were both quite helpful in providing information the auditors needed and in answering questions promptly.

According to the letter from Bauman Associates, “The size of the Village precludes a proper segregation of functions to assure adequate internal control over cash disbursements and cash receipts, especially as this related to utility billing and receipts. This is not unusual in municipalities of your size, but the Village Board of Trustees and management should continue to be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from a control point of view … we recommend that the Village segregate the control over cash receipts and general ledger entry wherever possible. We also recommend continued Board oversight of the reports noted previously as well as a comparison of budget to actual at interim periods throughout the year.”

As of January 1, 2015, Colfax had a general fund balance of $1.47 million.

As of December 31, 2015, Colfax had a general fund balance of $1.49 million.

Rescue squad

Billing for the Colfax Rescue Squad uses separate computer software that is not integrated with the village’s general ledger.

Ambulance billing contains so many variables that the general ledger software, Workhorse, is not able handle all of the variables, Niggemann said.

The rescue squad account is reconciled monthly, “and that’s good,” Davidson said.

Additional recommendations for the rescue squad account include having the village board or the public safety committee also review and approve the billing adjustments printed monthly and approved by the administrator-clerk-treasurer, he said.

The write-offs of uncollectible amounts receivable are approved by the administrator-clerk-treasurer each month as well, and Davidson said he also is recommending the village board or public safety committee review and approve the write-offs of uncollectible amounts.

In addition, a monthly allowance should be provided for uncollectible ambulance billing based on an estimate from the write-off history or a percentage of revenue, whichever is more accurate. The allowance should be a monthly journal entry which debits bad debts expense and credits the allowance for the uncollectible amounts, Davidson said.

Sewer and water

The village’s sewer and water utilities are doing well, Davidson said.

The water utility had a surplus of $89,559, and the sewer utility had a surplus of $58,215, for a combined total of $147,774.

“They are in good shape,” Davidson said, adding that he recommended the village “stay out ahead of it so there is no sticker shock.”

By sticker shock, Davidson was referring to circumstances where the utilities are losing money and the Public Service Commission of Wisconsin then requires a rate increase.

Rand Bates, director of public works, wondered if there was an average amount for rate increases per year.

Some municipalities are required to raise the rates by as much as 60 percent or 70 percent, he said.

Municipalities can do what is called a “simple rate increase” of 3 percent, but if the utility is already doing pretty well, it will not qualify, Davidson said.

Other than that, “there is no magic number,” he said.

Davidson recommended the village board keep monitoring the sewer and water utilities, although as of now, “Colfax is in a good position relative to other utilities.”

The problem with utilities is that circumstances can change overnight, Davidson said.

For example, if the state Department of Natural Resources requires a municipality to build a multi-million wastewater treatment facility, the situation with rates can change quickly, he said.

The Village of Colfax water utility shows operating expenses of $175,898 for 2015, and the sewer utility shows operating expenses of $153,319.

The Colfax Village Board unanimously approved a motion to accept the financial statements for 2015.

Numbers

Here are some of the numbers included in the village’s financial statements for 2015:

• The village’s debt limit is based on 5 percent of $48 million in property value, which amounts to a total debt limit of $2.4 million. Colfax currently has outstanding debt of $1.426 million, leaving the remaining borrowing capacity at $975,559. To put it in context, at the end of 2015, the village had enough borrowing capacity remaining to cover the cost, for example, of approximately two more street projects.

• The general obligation debt payment for 2016 will be $106,257 in principal and $24,495 in interest for a total of $135,752. By 2030, at the current amount of general obligation debt, the village will have payed $1.90 million in principal and $204,124 in interest.

• $13,315 is restricted for future community development block grant program expenditures.

• $28,500 is restricted for the perpetual care of Colfax Evergreen Cemetery.

• $18,060 is restricted for future library operations.

• $77,912 is restricted for future improvements of the village hall.

• $195,115 is restricted for TIF No. 3 and TIF No. 4 debt service and future general obligation deb service.

• $154,869 is assigned for future major equipment replacement in various departments

• $33,490 is assigned for future rescue squad operations.

• $2,363 is assigned for a spreading garden, fencing and improvements at Colfax Evergreen Cemetery.

• $26,761 is assigned for library operations.

• $3,230 is assigned for holiday decorations.

• $138,804 is assigned for future improvements to the village hall.