East Haven Town Audit By The Numbers

It's official: The finished the 2010-11 fiscal year in the black, according to the recently released .

But the question remains: how much was actually left over in the town's coffers on June 30, 2011:

There's a big difference in the numbers. And so, which one is correct?

The answer, actually, is both.

But, you say, "How can that be true? How can the town finish the year with a multi-million-dollar surplus but only be left with some $200,000 in its general fund?"

Well, let's take a look. And if you'd like, feel free to print out and follow along with Page 19 of the town's Annual Financial Report, which is posted in the gallery that accompanies this article.

Excess Revenues

Now, the town did, indeed, finish with $3,725,768 in excess revenues at the end of the 2010-11 fiscal year. "Ok," you say," but how do we get that number?"

Well, East Haven took in $83,363,961 in revenue over the course of the fiscal year. But it actually only spent $79,638,193 over that same 12-month time period. The difference between the two is: $3,725,768.

   $83,363,961  Revenue In
- $79,638,193   Expenditures Out
  ========
   $3,725,768    Excess Revenue

In addition, the town also earned $1,672,168 in revenue from the sale of land it had owned next to Tweed Airport to the City of New Haven.
 
Now, add that to the surplus and we end up with a total excess revenue of $5,397,936.

   $3,725,768   Excess Revenues
+ $1,672,168   Revenue from Land Sale
  ========
   $5,397,936   Total Excess Revenues (or "Net Change in Fund Balance")

"OK," you're saying to yourself as you read along. "The town finished way ahead at the end of the fiscal year. That's great, we have a giant surplus. So why do some people say we only had $200,800 left in our general fund?"

To anwer that question, we have to look at the where the town's fund balance began the 2010-11 fiscal year.

July 1, 2010: In the Red

The auditors report that on July 1, 2010, the town had a negative fund balance of $5,197,136. This means the town started the 2010-11 fiscal year in the red.

Now, in order to calculate the fund balance for the end of the fiscal year, the auditors add together the fund balance the town began with on July 1 to the balance it ended with on June 30.
 
    $5,397,936    Fund balance on June 30, 2011
+($5,197,136)  Fund balance on July 1, 2010
 ========
     $200,800   Fund balance on June 30, 2011

"At the year end, the unassigned fund balance for the general fund was $200,800," town's annual financial report reads.

The "unassigned fund balance" is money in the town's general fund coffers that is available for any purpose. It is not assigned, or set aside, to pay expenses or offset deficits, etc. It is, for all intensive purposes, "free and clear" cash.

Think of it like a personal checking account. You may deposit a $100 check in your account. But if that account started with a negative balance of -$80, then after the check clears your real or actual balance will be $20.

And the town's general fund really is no different.

Final Numbers

And so, the report shows that while the town did take in a surplus of revenue of more than $5.39 million throughout the 12-month time period, the deficit that it began the fiscal year with ate through most of that excess revenue.

And that difference between the two left the town on June 30, 2011 with $200,800 "free and clear" in its general fund.

East Haven Patch will be filing an additional story about the annual town audit that will focus on the report's findings regarding the bookkeeping practices of the East Haven Public School District tomorrow.