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Auditor: Elk Mound has a healthy general fund balance

By LeAnn R. Ralph

ELK MOUND  —  The village of Elk Mound has a “very healthy general fund balance” that could cover as much as 10 and a half months of expenses, according to the village’s auditor.

Elk Mound’s available fund balance as a percentage of the expenditures is 88 percent, said Kimberly Shult, a CPA with Baker Tilly Virchow Krause LLP, at the Elk Mound Village Board’s May 2 meeting.

The recommendation is that a municipality have no less than two months of general fund operating expenditures in the general fund balance, Shult said, adding two months is 17 percent of the expenditures and 35 to 40 percent of expenditures is common among municipalities.

According to the audit report, in 2017, the village’s available fund balance was $555,196, and the expenditures were $629,023, which is 88.26 percent of the expenditures for the year that could be covered by the fund balance.

Over the past five years, the highest percentage of available fund balance as a percentage of expenditures was 91.34 percent in 2015, while the lowest percentage was 43.57 percent in 2014.

Debt

Elk Mound had general obligation outstanding debt of $712,878 in 2017, which is 41 percent of the general obligation debt limit of $1.74 million.

Municipalities can borrow 5 percent of their equalized value, Shult noted.

The 5 percent of equalized value is the basis for the general obligation debt limit.

In 2016, with total general obligation debt of $810,397, Elk Mound was at 47 percent of the debt limit.

In 2015, 2014 and 2013, Elk Mound stayed in the low to mid-50 percent range for percentage of debt limit.

Between 40 and 42 percent of outstanding debt to the debt limit is common for villages of Elk Mound’s size, Shult said.

Elk Mound’s percentage of debt service to non-capital expenditures was 21.5 percent in 2017; bond rating agencies want to see 20 percent or less, she said.

In 2016, the village’s percentage of debt service to non-capital expenditures was 22.15 percent, while in the three years before that it was 19.7 percent, 11.9 percent and 18.2 percent.

Utilities

The last full sewer and water rate increase in Elk Mound was in 2012, Shult said.

Last year, according to the financial report, the water utility had a loss of $1,645, and the sewer utility had a loss of $25,529, for a total loss of $27,174.

The village could apply to the Public Service Commission of Wisconsin for a simplified rate increase of 3 percent, Shult said.

A 3 percent rate increase would result in an increase in revenue of about $4,000, she said.

Steve Abraham, village president, wondered if the village could do a 3 percent rate increase every year.

The village can ask for a 3 percent water rate increase one time each year if the village qualifies for the increase. Increasing the water rates by 3 percent periodically is better than waiting for several years and  increasing the water rate by 25 percent all at once, Shult said.

Elk Mound’s sewer utility is deregulated, so the village board can raise the sewer rates without PSC approval.

The wastewater facility is the biggest expense, said Terry Stamm, village trustee and retired director of public works in Elk Mound.

The village “needs to fix things the way they should be fixed,” said Mark Levra, director of public works, adding he would encourage the village board to consider rate increases to generate adequate funds for repairs.

The Elk Mound Village Board unanimously accepted the audit report from Baker Tilly Virchow Krause, LLP.

All members of the village board were present for the meeting.

In addition to Abraham and Stamm, village trustees Paula Turner, Montana Boettcher, Deb Creaser-Kipp, Greg Kipp and Rebecca Livingston voted in favor of the motion.