Calculating final cost

As the end of the year approaches it’s important to keep in mind the reporting requirements that municipalities will face in the New Year. On the top of that list is the Annual Financial Report (AFR) that must be submitted on Gateway by March 1st. The AFR requires that municipalities report cash and investment balances, receipt and expenditure detail for each fund, capital asset balances as well as a variety of other information. This reporting requirement can be time consuming for clerk-treasurers and financial staff.

With clerk-treasurers focused on the AFR, where does that leave the utilities? As utilities are not required to be budgeted via the State mandated process, the financial management of utilities may go overlooked as management is focused on State deadlines and tax supported funds. To help fill this void, Baker Tilly Municipal Advisors assists many utilities with Financial Management Reports (FMR) that aid in the financial management of utilities.

The FMR starts with the historical financial information of the utility to inform management on how revenues, expenses and cash balances have been trending over the last few years. From that information we work with management to build a budget to help track spending through the current year and look for opportunities to reduce costs. Along with the budget, we work closely with utility management to develop a multi-year capital plan for the utility. Once the capital projects plan is developed, we project the budget out three to five years and layer in the multi-year capital plan to develop a long-term financial forecast. Finally, with all the financial information in place we prepare a narrative summary of the report. The narrative summary is beneficial for decision makers who don’t see the day-to-day utility numbers and are looking for a summary overview of the utility’s financial health.

FMRs are great tools to help utility personnel, councils and clerk-treasurers answer key management questions and communicate with the public. Questions such as:  how are we doing compared to budget; are we overspending; are our fund balances sufficient; can we afford equipment and facility upgrades; do we need to increase rates? Without FMRs, municipalities often have no framework for answering these key management questions for their utilities. As we approach the New Year, and are focused on AFRs as well as other state required reporting deadlines, you are encouraged not to forget about your utilities.

For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

Eric J. Walsh
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