By Rebecca Dopp
Times-News Correspondent
Levan Town received some “dings” on their annual audit report this year, but they are mostly easy fixes. Greg Ogden, CPA, Springville, gave the annual report. “There were a few items of state compliance issues that you need to address,” he said. The first finding said that the Town exceeded the amount of expenses budgeted for the water fund by $15,700 and the electric fund by $2,274. State law requires that fund expenditures/expenses be limited to the budgeted amounts. “The issue this year was the Town didn’t budget for depreciation, and [by] not doing that, it caused each of those two budgets to be overspent once depreciation was added in,’ said Ogden. “It’s only added in by June 30, Pelorus does that for you, they track your depreciation schedule.” Ogden said that he had spoken with Beth Hone, clerk, and Stephanie Wood, treasurer, and they said they would review the budget at the end of every year and amend it if necessary to ensure that budgets are not overspent. They would also account for depreciation in the budget amendments. “It’s a pretty easy fix,” he said. The second finding was in regard to the unrestricted general fund balance. State law requires that towns maintain an unrestricted general fund balance of a maximum of 75% of their total general fund revenues. The Town was allowed an unrestricted general fund balance of $291,307 as of June 30, 2017. The actual unrestricted general fund balance was $352,152. “Stephanie and Beth discussed this with Pelorus and were told that they were okay,” said Ogden. “The problem is the State measures it differently what is included.” The Town management did not transfer enough from the general fund to the capital projects fund at year-end to maintain a balance within the State-imposed limits. They were unaware that the balance they had been accumulating for a new ambulance would be included as part of the unrestricted general fund balance. This caused the town to have more equity in their general fund than they were allowed. “Do we need to spend more money?” asked Corey Christensen, council member. Ogden said the town needs to either spend the money on a project or move it over into the capital projects fund. The third finding said that the treasurer’s bond did not provide the required coverage for the treasurer for 2017. “You are required to have a treasurer’s bond based on a certain percentage of your budgeted revenues, and it should have been $85,000; you have coverage of $70,000,” Ogden said. He recommended that the council bump up the coverage if they anticipate future budgets will continue to increase. Wood said they contacted Utah Local Governments Trust and increased the coverage for the Treasurer’s bond to $90,000. The last finding found that the Town had not posted minutes of regular council meetings, work sessions, and planning and zoning meetings to the Public Notice Website during 2017. He said they were posted to the town’s website, but not to the Public Notice Website which the state auditor has set up. “It seems kind of silly to double post them, but that seems like the best option,” he said. “I’ve seen some towns and cities where their link on their website takes them directly to the Public Notice Website.” He recommended the Town double post them. Hone said she had been posting the minutes since July. Christensen asked if there were any penalties attached to any of the findings. Ogden said there were not any penalties, but that the town just needed to fix them. After reviewing the financial statements, Ogden said that the Town was in good financial shape. In the net position for the town, in the governmental activities, the Town had $693,662 tied up in equipment and other capital assets. In business-type activities, the Town had $1,647,087, after taking away the revenue bonds that are outstanding. In total, the Town has over $2,300,000 of net investment in capital assets. “That can’t be used for anything else, that’s already been spent, it’s already tied up,” he said. The Town has restricted money—$25,150 for perpetual care and $71,274 for capital projects—which is Class C road money (specifically earmarked for roads). The amount of money that is unrestricted—money the Town can use—totals almost $699,093. That money can be used for operations and other projects the Town might have planned for the future. The money that was assigned to the ambulance—$89,819—was what caused the second finding. He said that to Pelorus and the Town staff, that money looked like it was already assigned, like it was not a part of the unrestricted portion. The State auditor rule says that amount gets added to the unassigned amount—$262,333—and the Town was well over. “They treat assigned amounts the same as unassigned amounts,” Ogden said. “It’s all a part of that unrestricted fund balance. You want to add those two together in the future to see how much unrestricted fund balance you have at the end of the year.” In the business-type activities, the utilities, some key numbers showed that the Town’s net operating income (loss) was in a deficit. Ogden said they weren’t big deficits, but the Town needs to have those in the positive. “One of the main reasons that they’re negative is the depreciation expense,” he said. “But the thing is, you have to consider that every one of those systems is declining in value each year, that’s what the depreciation represents. You want to make sure you are operating at a profit because then you will have enough to pay to replace any systems that wear out.” He didn’t think any of the deficits pointed to the Town having to raise rates. Mayor Russ Mangelson said the Town had been doing some upgrades in the electric fund that explained the deficit. The Town had also added Internet that caused the cable fund to change. “I suggest you keep an eye on those, and if the trend keeps getting bigger, negative, then you might have to look at raising rates,” Ogden said. The Town had two bonds that are outstanding—2004 Water Revenue Bonds and 2014 Electric Revenue Bonds—and at the end of 2017, the balance on the water bonds was $50,000 and the electric bonds is $263,000. The Town has 3.29% rate on the water bonds, but they are almost paid off. They have 0% rate on the electric bonds. “I think you are in great shape. You have very little debt,” he said. Ogden thanked the Levan Town staff for their help. He said he appreciated the fact that they call when they have questions. “I have a lot of clients that don’t ever call, and I think i’m going to get there and find a mess. With Stephanie and Beth, they always call when they have questions. I appreciate that. I know that means they are being conscientious, paying attention, they want to do it right,” he said.4> | 