Community Corner

Municipal Audit Shows $5.19M Deficit for FY'10; Town Says Half Covered

Spending decreased, revenues increased, assets decreased.

Revenues went up. Expenses went down. Assets went down. And the town closed the year with a $5.19 million deficit, according to the FY’10 audit, which just arrived.

Finance Director Tom Thompson was quick to point out that $2,785,008 was thrown into the 2011 fund balance to wipe out the 2009 deficit of the same amount. The audited deficit  for 2010 was $2.4 million. (The fiscal year starts on July 1 and ends June 30.)

According to the audit, prepared by Kostin, Ruffkess of Farmington, from FY’09 to FY’10:

Revenues went from $84,365,090 to $87,312,540
Expenses went from $96,057,441 to $95,455,220
Net assets went from $38,443,640 to $30,446,812

The total bonded debt recorded at the end of FY’10 was $48,305,967, of which $11.3 million is scheduled to be paid off with state grants. The debt is split by general purpose bonds of $23.4 million; school bonds of $22.7 million; and sewer bonds of $2.2 million.

For general obligation debt, Moody’s rated East Haven with a “Baa1“; Standard & Poor’s with an “A-Stable.” Kostin, Ruffkess note that state statute allows the town to carry $355,570,040 of debt “which is significantly in excess of the Town’s outstanding general obligation debt.”

The audit states that net assets plummeted due to operating losses in capital funds of $1.1 million; in internal service funds of $1.6 million; and in the general fund of $2.4 million.

Revenue changes

Charges for services increased $1,338,062, primarily due to the “High School rental fund related to the rental” for Pathways at 220 Dodge Ave. Capital grants and contributions rose $1,416,347 from state grants for capital and public works programs.

Expense changes

General government went down $1,680,796 from a decrease in noncapitalized projects. Public works costs shot up $603,473 from noncapitalized projects.

Patch did not get a hold of the school audit, but Thompson said it cited the same deficiencies as it has for an unstated number of years. According to the “Federal Single Audit and State Single Audit” for FY’09, the Board of Education was cited for, among other things:

  • Bank reconciliations for operating and payroll bank accounts were not reconciled in a “regular and timely manner during the year.”
  • Journal entries, cash receipts and cash disbursements were not posted timely in the general ledger, which resulted in inaccurate cash  balances, revenues and expenditures.
  • Bank reconciliations for the Board’s education grants and school lunch bank accounts were not reconciled in a timely manner.
  • Journal entries, cash receipts and cash disbursements were not posted timely in the general ledger for the education grants and school lunch funds.
  • Money was taken from the “special education cluster” and Title 1 grants to local educational agencies “in excess of immediate cash requirements.” But 19 other so-called “drawn down” actions were done properly.


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